QUESTION 24 The following cost incurred by the exploration department of Rifa Energy Company during 2020. Shooting rights $45,000 Transportation of seismic machine $2,000 Seismic machine $45,000 Reconnaissance survey $35,000 Salaries for exploration activities $50,000 Production facilities (flow line and tanks) $25,000 The amount to be recorded as exploration cost is A. $132,000 B. $177,000 C. $202,000 D. $157,000

QUESTION 24 The following cost incurred by the exploration department of Rifa Energy Company during 2020. Shooting rights $45,000 Transportation of seismic machine $2,000 Seismic machine $45,000 Reconnaissance survey $35,000 Salaries for exploration activities $50,000 Production facilities (flow line and tanks) $25,000 The amount to be recorded as exploration cost is A. $132,000 B. $177,000 C. $202,000 D. $157,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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PROBLEM 19.3ATarget CostingMeiger Mining, Inc., has just discovered two new mining sites for iron ore. Geologists and engineers have come up with the estimates on the following page regarding costs and ore yields if the mines are opened.page 879 Site ASite BVariable extraction costs per ton$3.80$4.00 Fixed costs over the life of the mine: Blasting$150,000$185,000Construction225, 000240, 000 Maintenance 25, 00020, 000Restoration costs 40, 00035, 000 Total fixed costs$440,000$480,000 Total tons of ore that can be extracted over the life of the mine: 200, 000160, 000Meigers owners currently demand a return of 20 percent of the market price of iron ore.Instructionslf the current market price of iron ore is $8 per ton, what is Meigers target cost per ton?Given the $8 market price, should either of the mines be opened? The engineer working on Site B believes that if a custom conveyor system is installed, the variable extraction cost could be reduced to $3 per ton. The purchase price of the…
Chapter 10 Problem Set A Problem 10-1 On January 1, 2019 Crampton Company acquired land on which to construct a new distribution warehouse. During 2019, the company made expenditures as follows: Contract price of the land $600,000 Closing costs $23,000 Hoerr Excavating for clearing and grading $65,000 Sparks Concrete Construction for sidewalk and parking lot $158,500 Touchstone Lighting for parking lot lighting $21,500 J Hacker and Associates, Architects $71,000 Town of Normal for building permits $9,500 Lewis General Contractors $4,100,000 Crampton also purchased $1,450,000 of warehousing equipment and conveyors. The entire facility was placed in service before December 31, 2019. Prepare Crampton Company’s PPE section of their balance sheet dated December 31, 2019 before the adjusting entries for depreciation
Review Question El Dorado Limited This company convened a meeting of its managers and informed them of an opportunity for investment in Lala land . The management accounting department was asked to study and recommend whether this investment is going to be profitable or not . They provide them with the following details: TABLE 1 Capital Expenditure involved $70000 Maturity period iof the project 4 yrs Revenue $18000 Salary expense $5000 Lease expense annually $3500 Supplies expense $1500 Maintenance expense $900 Utilities $1200 Cost of capital 10% Salvage value 34000 Tax rate 25% The company will need to spend $6200 on net working capital but this sum will be returned at the end of the period. The estimated sale of the capital asset at the end of the project will be $20000. The company can sublet part of the facilities for $2000 yearly during the project . The capital expenditure is depreciated using straight…
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Exercise 14-7 (Algo) Net Present Value Analysis of Two Alternatives [LO14-2] Perit Industries has $115,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Project B Cost of equipment required $ 115,000 $ 0 Working capital investment required $ 0 $ 115,000 Annual cash inflows $ 21,000 $ 69,000 Salvage value of equipment in six years $ 8,700 $ 0 Life of the project 6 years 6 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 15%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.) 2. Compute the net present value of Project B. (Enter negative values with a minus sign. Round your…
30- The cost of the 2020 model "Passat Impression 1.5 TSI ACT 150 PS 7-speed DSG" vehicle, acquired on 17.08.2020 to be used in management activities, is 300.000 TL. What is the amount of depreciation to be allocated in the last year according to the prorated depreciation method for this vehicle with an economic life of 10 years? a) 30.000 TL B) 47.500 TL NS) 17.500 TL D) 60.000 TL TO) 12.500 TL
Question 2 Two possible routes for a power line are under study. Data on the routes are as shown in the following table: Option Information Length First Cost Maintenance cost Useful Life (years) Salvage Value Yearly power loss Annual Taxes Around the Lake Under the Lake 15 km 5 km $25,000 /km $400/km/yr $5000 / km $200/km/yr 15 20 $3000/km S5000/km S500/km |2% of the first cost 2% of the first cost S500/km If MARR = 10%, which alternative should you select? Justify your answer. (
Depletion of Natural Resources Brandon Oil Company recently purchased oil and natural gas reserves in a remote part of Alaska for $800,000. Brandon spent $10,000,000 preparing the oil for extraction from the ground. Brandon estimates that 120,000,000 barrels of oil will be extracted from the ground. The land has a residual value of $20,000. During the year, 14,750,000 barrels are extracted from the ground. Required: Calculate the amount of depletion taken in the current year. (Note: In your calculations, round depletion per barrel to two decimal places.)
Problem 5: Platypus Corporation's managers have presented the company's management with two proposals for expanding its production capacity. Based on the following two different alternatives, which proposal should they adopt? Cost of the Equipment Required Project 1 $250,000 Working Capital Investment Required 0 Annual Cash Inflows $65,000 Maintenance cost in year 4 $15,000 Maintenance cost in year 6 0 Salvage Value of Equipment in 8 Years $12,000 Project 2 $100,000 $150,000 $50,000 0 $15,000 0 Both projects have a life of 8 years. In 8 years Project 2's working capital will be released and be available to invest in other projects. The company has a discount rate of 16% Required: 1) Calculate the net present value for each project. 2) Based solely on the net present value of the project, which alternative would you recommend the company invest in? Why?
Exercise 14-7 (Algo) Net Present Value Analysis of Two Alternatives [LO14-2) Perit Industries has $165,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Cost of equipment required working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A $ 305,000 50 $ 21,000 1. Nat present valus project A 2. Net present value project B 3. Which investment alternative of either) would you recommend that the company accept? Project 8 $ 165,000 $ 56,000 years The working capital needed for project will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 14%. Click here to view Exhibit 148-1 and Exhibit 148-2, to determine the appropriate discount factors) using tables. Required: 1. Compute the net present value of Project A. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.) 2.…