Pasta, a restaurant specializing in fresh pasta, installed a pasta cooker in early 2017 at a cost of $12,400. The cooker had an expected life of 5 years and a residual value of $600 when installed. As the restaurant's business increased, it became apparent that renovations would be necessary so the cooker's output could be increased. In January 2020, Pasta spent $8,200 to install new heating equipment and $4,100 to add pressure-cooking capability. After these renovations, Pasta estimated that the remaining useful life of the cooker was 10 years and that the residual value was now $1,500. Required: 1. Compute 1 year's straight-line depreciation expense on the cooker before the renovations. per year 2. Assume that three full years of straight-line depreciation expense had been recorded on the cooker before the renovations were made. Compute the book value of the cooker immediately after the renovations were made. 3. Compute 1 year's straight-line depreciation expense on the renovated cooker. рer year

Pasta, a restaurant specializing in fresh pasta, installed a pasta cooker in early 2017 at a cost of $12,400. The cooker had an expected life of 5 years and a residual value of $600 when installed. As the restaurant's business increased, it became apparent that renovations would be necessary so the cooker's output could be increased. In January 2020, Pasta spent $8,200 to install new heating equipment and $4,100 to add pressure-cooking capability. After these renovations, Pasta estimated that the remaining useful life of the cooker was 10 years and that the residual value was now $1,500. Required: 1. Compute 1 year's straight-line depreciation expense on the cooker before the renovations. per year 2. Assume that three full years of straight-line depreciation expense had been recorded on the cooker before the renovations were made. Compute the book value of the cooker immediately after the renovations were made. 3. Compute 1 year's straight-line depreciation expense on the renovated cooker. рer year

Name: Pasta, a restaurant specializing in fresh pasta, installed a pasta co
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: Pasta, a restaurant specializing in fresh pasta, installed a pasta cooker in early 2017 at a cost of $12,400. The cooker had an expected life of 5 years and a residual value of $600 when installed. As the restaurant's business increased, it became a

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

Faye, Inc. finished constructing its factory on Jan. 1, 2012 at a total cost of P80,000,000. The factory has an estimated useful life of 40 years with ho residual value. On Jan. 1, 2021, Faye replaced the walls on one of the areas of the factory at a total cost of P10,000,000. The estimates reveal that the cost allocated to the walls is P5,000,000. This improvement will increase the life of factory by 5 years. How much is the Loss on Replacement to be recognized on Jan. 1, 2021?.
Required: 1. Prepare a comparative income statement covering the next five years, assuming: a. The new machine is not purchased. b. The new machine is purchased. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) Total expenses w Transcribed Text of purchasing the new machine Keep Old Machine S Minimum saving in costs 5 Years Summary Buy New Machine Ĉ Difference 2. Compute the net advantage of purchasing the new machine using only relevant costs in your analysis. (Do not round intermediate calculations.) Check my work 3. What is the minimum saving in annual operating costs that must be achieved in order for the president to consider buying the new machine?
Molinari Co. operates several cafes throughout the state. They are opening a new location and purchase an espresso machine for $11343 cash on January 1, 2012. Molinari expects this machine to last 5 years and to get 322000 shots of espresso over the machine's life. At the end of the machine's life they estimate the salvage value will be $3201. Molinari will depreciate this espresso machine using the units of activity method. 4 full months have passed since depreciation was last updated on December 31, 2013. During this time, Molinari pulled 28800 shots. Molinari decides to sell this espresso machine and will receive $8692 cash for it. (Remember that during 2012 and 2013 they pulled a total of 113000 shots. The journal entry to record the first step of selling the espresso machine is: dr. Depreciation expense cr. Accumulated depreciation For what dollar amount will this journal entry be made? (Round intermediate calculations to the nearest hundredth. Enter your final answer rounded to…
In 2018, the Port of Spain General Hospital purchases a scanner at a cost of $ 100,000. The scanner has a useful life of 5 years with no residual value. It is depreciated using the straight line method and its annual operating costs are $ 120,000. In 2019 the hospital is approached by another supplier to purchase a more modern machine for $ 115,000. This new machine has a life span of 4 years and will save $ 25,000 in annual operating costs. The new supplier is willing to buy the old scanner for $ 30,000. Required: Compute the gain or loss if the old scanner is replaced in 2019. 2. Advise the hospital on the purchase of the new scanner.
On January 3, 2020, Gagne Inc. paid $320,000 for a computer system. In addition to the basic purchase price, the company paid a setup fee of $2,500, $6,400 sales tax, and $21,100 for special installation. Management estimates that the computer will remain in service for five years and have a residual value of $20,000. The computer will process 50,000 documents the first year, decreasing annually by 5,000 during each of the next four years (that is 45,000 documents in 2021, 40,000 documents is 2022, and so on). In trying to decide which depreciation method to use, the company president has requested a depreciation schedule for each of three depreciation methods (straight-line, units-of-production, and double-diminishing-balance). Before completing the straight-line depreciation schedule, calculate the straight-line depreciation rate. First, select the labels for the formula and then compute the rate. (Round the rate to two decimal places.) Date January 3, 2020 December 31, 2020 December…
Jarrod has a small business where he produces ping pong balls. He has an opportunity to update his production process with a piece of equipment that costs $46,000 on June 10, 2023. A new trimming machine for when the ball is being formed. The equipment is expected to have a 12-year service life. The trimming machine also has an estimated residual value of $9,000. Determine for the year 2022 the depreciation expense for each of the methods listed. 1.Straight line 2. Sum-of-the-years'-digits 3. Double-declining balance
A heavy equipment rental company intends to replace a grader. It was purchased 5 years ago at a cost of $120,000. It was estimated to have a useful life of 10 years. It could be traded in now for $20,000. Due to frequent breakdown and repairs it was rented out for only 1,400 hours during the past year and the total repair cost was $6,000. A new grader is now available costing $200,000 and it is predicted to have an economic life of 10 years. It is expected to be rented at least 2,100 hours a year and maintenance cost will not exceed $3,500. All other out-of-pocket costs for the two machines would equal. If money is worth 15%, what must be the hourly rental rate for the new grader so that it could replace the old one?
A homeowner remodeled their kitchen in November 2018. The remodel project included purchasing a high-end residential grade dishwasher with a 10 year useful life expectancy that cost $10,000. The current replacement cost of the dishwasher is $15,000. Breaking news: Last night a fire destroyed the dishwasher. If the homeowner maintains Property coverage on an actual cash value (ACV) basis, how much would they recover from their insurer for the dishwasher? $5,000 $10,000 O $7,500 O $15,000
On January 1, 2021, X Company bought a machine for $44,000. It's now January 1, 2022, and management is disappointed that 2021 operating costs with the machine were $32,000. Since they are expecting future operating costs to continue to be $32,000 a year, they are considering replacing the machine with a new one. Although the new machine will cost $47,000, operating costs with the new machine will decrease by $8,000 each year. Both machines will last for 4 more years. The current machine can be sold immediately for $8,000 but will have no salvage value at the end of 4 years. The new machine will have a salvage value of $4,000 at the end of 4 years. Assuming a discount rate of 8%, what is the net present value of replacing the current machine with the new one? Submit Answer Tries 0/4
On January 2, 2021, Twilight Hospital purchased a $92,000 special radiology scanner from Blossom Inc. The scanner had a useful life of 4 years and was estimated to have no disposal value at the end of its useful life. The straight-line method of depreciation is used on this scanner. Annual operating costs with this scanner are $104,000. Approximately one year later, the hospital is approached by Dyno Technology salesperson, Jacob Cullen, who indicated that purchasing the scanner in 2021 from Blossom Inc. was a mistake. He points out that Dyno has a scanner that will save Twilight Hospital $24,000 a year in operating expenses over its 3-year useful life. Jacob notes that the new scanner will cost $109,000 and has the same capabilities as the scanner purchased last year. The hospital agrees that both scanners are of equal quality. The new scanner will have no disposal value. Jacob agrees to buy the old scanner from Twilight Hospital for $43,000. (a) If Twilight Hospital sells its old…
Concord Company owns 9,000 acres of timberland purchased in 2009 at a cost of $1,470 per acre. At the time of purchase, the land without the timber was valued at $420 per acre. In 2010, Concord built fire lanes and roads, with a life of 30 years, at a cost of $88,200. Every year, Concord sprays to prevent disease at a cost of $3,150 per year and spends $7,350 to maintain the fire lanes and roads. During 2011, Concord selectively logged and sold 735,000 board feet of timber, of the estimated 3,675,000 board feet. In 2012, Concord planted new seedlings to replace the trees cut at a cost of $105,000. A-Determine the depreciation expense and the cost of timber sold related to depletion
Eryn Ltd is a forestry company that owns a plantation forest of silver firs trees. Typically, silver firs trees take 20-50 years until they are mature to harvest. The trees were planted in 2010. At the start of the 2021 financial year, there were 1,520 silver firs trees on the plantation with each valued at $170. At the end of the financial year, due to air pollution, Eryn Ltd had only 1,250 trees but each was valued at $220. Eryn Ltd also had equipment that valued at a book value of $130,000 ($26,000 accumulated depreciation) as at the end of 2021. This equipment was revalued to $140,000. In addition, Eryn Ltd paid $20,000 pruning expenses in 2021. Required: a) Record the appropriate journal entries and show your workings. Accounts Debit $ Credit $ b) Based on your answers in (a), calculate…