Solar Industries purchased equipment for $150,000 and spent $30,000 on installation. Annual maintenance cost is $5,000. Calculate the capitalized cost:
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- Lynda Inc. purchased a piece of equipment for $15,000. Additional costs include transportation, $300; installation, $700; test run, $1,000; and insurance from the date that the equipment begins productive output, $1,200. What is the capitalized amount of the equipment? $17,000 $18,200 $16,000 $15,000Qu Holiday Laboratories purchased a high speed industrial centrifuge at a cost of $420,000. Shipping costs totaled $15,000. Foundation work to house the centrifuge cost $8,000. An additional water line had to be run to the equipment at a cost of $3,000. Labor and testing costs totaled $6,000. Materials used up in testing cost $3,000. The capitalized cost is: FinThe table given below lists the relevant cost items for a specific system purchase. The operating expenses for the new system are $10,000 per year, and the useful life of the system is expected to be five years. The salvage value for depreciation purposes is equal to 25% of the hardware cost. Cost Item Cost Hardware $160,000 Training $15,000 Installation $15,000 a) What is the Book Value (BV) of the device at the end of year three if the Straight Line (SL) depreciation method is used? b) Suppose that after depreciating the device for two years with the SL method, the firm decides to switch to the double declining balance depreciation method for the remainder of the device's life (the remaining three years). What is the device's BV at the end of four years?
- A company purchased new equipment for $40,000. The company paid cash for the equipment. Other costs associated with the equipment were: transportation costs, $2,300; sales tax paid, $2,400; and installation cost, $2,300. The total capitalized cost reported for the equipment was: Multiple Choice $44,700. $47,000. $40,000. $42,300.Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $229,500. Project 2 requires an initial investment of $156,000. Annual Amounts Project 1 Project 2 Sales of new product $ 148,000 $ 128,000 Expenses Materials, labor, and overhead (except depreciation) 77,000 44,000 Depreciation—Machinery 32,000 30,000 Selling, general, and administrative expenses 20,000 32,000 Income $ 19,000 $ 22,000 (a) Compute each project’s annual net cash flow.(b) Compute payback period for each investment.Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $268,000. Project 2 requires an initial investment of $170,000. Annual Amounts Sales of new product Expenses Project 1 Project 2 $ 180,000 $160,000 Materials, labor, and overhead (except depreciation) 85,000 52,000 Depreciation-Machinery 40,000 38,000 Selling, general, and administrative expenses 28,000 40,000 Income $27,000 $ 30,000 (a) Compute each project's annual net cash flow. (b) Compute payback period for each investment. Annual Amounts Income Sales of new product Project 1 Project 2 Cash Flow Income Cash Flow $180,000 $160,000 Expenses Materials, labor, and overhead (except depreciation) 85,000 52,000 Depreciation-Machinery 40,000 38,000 Selling, general, and administrative expenses 28,000 40,000 Income $27,000 $30,000 Net cash flow $0 Payback Period Numerator: / Denominator: Project 1 Project 2 = Payback period = 0 = 0
- Nelson Company purchased equipment and incurred the following costs: Cash price = $55,000 Sales taxes = $4,400 Insurance during transit = $400 Site preparation, installation, and testing= $2,300What amount should be used as the cost basis of the equipment?On January 1, 2021, Fatema & Company purchased a machine for use in its production process. The cash price of the machine was Tk. 600,000. Related expenditures included: value added tax Tk. 50,000, shipping costs Tk. 10,000, insurance during shipping Tk. 18,000, installation and testing costs Tk. 25,000, Go-down rent Tk. 5,000 and Tk. 10,000 of oil and lubricants to be used with the machinery during its first year of operation. The company estimates that the useful life of the machine is 4 years with a Tk. 5,000 salvage value remaining at the end of that time periodHnH Solutions acquired a machine by making the following payments: Net cash price Rs. 116,000 including 16% Sales tax; Carriage in Rs. 6,000; Insurance in transit Rs. 5,000; Fire insurance for the next 4 years Rs. 8,000; Installation charges Rs. 20,000; Overhauling Charges (Before Use)Rs.2000; Charges to repair the damage caused during installation Rs. 2,000. REQUIRED: Classify the above payments into capital expenditures and revenue expenditures. Give and entry to record acquisition of machine, and another entry to record expenditures by Debiting General Expenses Account.
- HnH Solutions acquired a machine by making the following payments: Net cash price Rs. 116,000 including 16% Sales tax; Carriage in Rs. 6,000; Insurance in transit Rs. 5,000; Fire insurance for the next 4 years Rs. 8,000; Installation charges Rs. 20,000; Overhauling Charges (Before Use); Charges to repair the damage caused during installation Rs. 2,000. REQUIRED: Classify the above payments into capital expenditures and revenue expenditures. Give and entry to record acquisition of machine, and another entry to record expenditures by Debiting General Expenses Account.Purchased land costs 2,500,000 and a Bank transfer is made. The cost of excavation of the old building and the base of the new building is 300,000 + %10VAT, the Property tax paid is 60,000 and Estate company invoice is 30,000+%10VAT is on the account. Please do necessary accounting enteries.A newly constructed water treatment facility costs $2 million. It is estimated that the facility will need revamping to maintain the original design specification every 30 years at a cost of $1 million. Annual repairs and maintenance costs are estimated to be $100,000. At an interest rate of 8%, determine the capitalized cost of the facility, assuming that it will be used for an indefinite period.
