On January 1, Year 2 Boothe Company paid $12,000 cash to extend the useful life of a machine. Which of the following statements is true regarding the- financial statement effects of this expenditure? Multiple Choice Retained earnings Increases Book value of machine increases Retained earnings decreases Book value of machine decreases

On January 1, Year 2 Boothe Company paid $12,000 cash to extend the useful life of a machine. Which of the following statements is true regarding the- financial statement effects of this expenditure? Multiple Choice Retained earnings Increases Book value of machine increases Retained earnings decreases Book value of machine decreases

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A machine with a 4-year estimated usefull life and an estimated 15% residual value was acquired on January 1 .Would depreciation expense using the Sum of-the-years’－digits method be higher or lower than depreciation expense using the double-declining balance method the first and second years?
Dillard Company starts the year with $10,000 in its cash account, $10,000 in its equipment account, $3,000 in accumulated depreciation and $17,000 in its retained earnings account. During the year Dillard sells the equipment for $6530. After the sale of equipment is recorded, the retained earnings account will have a balance of $________.
Help me out please
Subject : Accounting
On January 1, 20X7, Server Company purchased a machine with an expected economic life of five years. On January 1, 20X9, Server sold the machine to Patron Corporation and recorded the following entry: Cash Account Accumulated Depreciation Machine Gain on Sale of Equipment Debit Odebited for $25,000. O debited for $1,000. O credited for $45,000. Odebited for $15,000. 45,000 28,000 Credit 70,000 3,000 Patron Corporation holds 75 percent of Server's voting shares. Server reported net income of $50,000, and Patron reported income from its own operations of $100,000 for 20X9. There is no change in the estimated economic life of the equipment as a result of the intercorporate transfer. Based on the preceding information, in the preparation of the 20X9 consolidated balance sheet, in the consolidation entry machine will be:
Pls help stepwise thanks.
2. In a business with financial years ended 31 December. A machine is bought for P420,000 on 1 January Year 1. The estimated useful life is 10years. In Year 5, the machinery has been sold for P280,000. Show the accounting entries for each year up to Year 5 using sinking fund at 18%. You are to show for each year up to 31 Dec Year 5: (a) Machinery account (b) Provision for depreciation (c) Disposal account (d) Profit and loss account (e) Balance sheet
at the begining of year 1, copeland drugstore purchased a new computer system for $250,000. It is expected to have a five year life and a $40,000 salvage value. b. record the purchase of the computer system and the depreciaiton expense for the first year under straight line and double decling balance methods in a financial statements model.
Schrade Company bought a machine for $98,000 cash. The estimated useful life was four years and the estimated residual value was $6,040. Assume that the estimated useful life in productive units is 121,000. Units actually produced were 44,000 in Year 1 and 46,000 in Year 2. Required: 1. Determine the appropriate amounts to complete the following schedule. 2-a. Which method would result in the lowest Earnings per Share for Year 1? 2-b. Which method would result in the lowest Earnings per Share for Year 2? 3. If used for tax reporting, which method would result in the highest amount of cash outflows in Year 1? Required 1 Required 2a Required 2b Required 3 Determine the appropriate amounts to complete the following schedule. Note: Do not round your intermediate calculations. Method of Depreciation Straight-line Units-of-production Double-declining-balance Depreciation Expense for Year 1 Year 2 Net Book Value at the End of Year 1 Year 2
Further information 1. Depreciation has not yet been charged. There were no movements in non-current assets during the year. The plant is depreciated at 10% straight-line on a monthly basis taking into account the month of sale or purchase. Freehold buildings are depreciated over their useful life of 40 years. Depreciation on the plant is charged to cost of sales. Depreciation on freehold buildings is charged to administrative expenses. 2. Closing inventories at cost amounted to £X1. 3. The company paid £138,000 in insurance costs in August 2020, which covered the period from 1 September 2020 to 31 August 2021. This was included in administrative expenses in the trial balance. 4. Interest on the bank loan for the last three months of the year has not been included in the accounts in the trial balance. The corresponding figure as at 31 December 2019 was £220,000. 5. The income tax charge for the year has been calculated as € X2. 6. A cheque received from customer Broke…
Further information 1. Depreciation has not yet been charged. There were no movements in non-current assets during the year. The plant is depreciated at 10% straight-line on a monthly basis taking into account the month of sale or purchase. Freehold buildings are depreciated over their useful life of 40 years. Depreciation on the plant is charged to cost of sales. Depreciation on freehold buildings is charged to administrative expenses. 2. Closing inventories at cost amounted to £8,650,000. 3. The company paid £138,000 in insurance costs in August 2020, which covered the period from 1 September 2020 to 31 August 2021. This was included in administrative expenses in the trial balance. 4. Interest on the bank loan for the last three months of the year has not been included in the accounts in the trial balance. The corresponding figure as at 31 December 2019 was £220,000. 5. The income tax charge for the year has been calculated as £1,030,000. 6. A cheque received from…
The following information is available for Reynolds Corporation: Retained Earnings, December 31, 2020 $1,500,000 Profit for the year ended December 31, 2021 250,000 The company accountant, in preparing financial statements for the year ending December 31, 2021, has discovered the following information:The company's previous bookkeeper, who has been fired, had recorded depreciation expense on a machine in 2019 and 2020 using the double diminishing-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effect of the error on prior years was $9,000. Depreciation was calculated by the straight-line method in 2021. Reynolds' average tax rate is 22%. During 2021, Reynolds declared and paid cash dividends of $80,000.Instructions a)Calculate the impact on retained earnings. b)Prepare the statement of retained earnings for 2021. Please don't provide solution in an image format thank you