Swifty Limited purchased an oil tanker depot on July 2, 2023, at a cost of $516,000 and expects to operate the depot for 10 years.After the 10 years, Swifty is legally required to dismantle the depot and remove the underground storage tanks. It is estimated that itwill cost $64,500 to do this at the end of the depot's useful life. Swifty follows ASPE.Show how all relevant amounts will be reported on Swifty's financial statements at December 31, 2023. (Round answers to Odecimal places, e.g. 5,250.)I Current AssetsSWIFTY LIMITEDBalance Sheet (Partial)As at December 31, 2023SWIFTY LIMITEDIncome Statement (Partial)For the Year Ended December 31, 2023$14A

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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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In 2021, the Marion Company purchased land containing a mineral mine for $1,740,000. Additional costs of $676,000 were incurred to develop the mine. Geologists estimated that 400,000 tons of ore would be extracted. After the ore is removed, the land will have a resale value of $116,000. To aid in the extraction, Marion built various structures and small storage buildings on the site at a cost of $184,000. These structures have a useful life of 10 years. The structures cannot be moved after the ore has been removed and will be left at the site. In addition, new equipment costing $96,000 was purchased and installed at the site. Marion does not plan to move the equipment to another site, but estimates that it can be sold at auction for $4,000 after the mining project is completed. In 2021, 60,000 tons of ore were extracted and sold. In 2022, the estimate of total tons of ore in the mine was revised from 400,000 to 451,000. During 2022, 96,000 tons were extracted. Required: 1. Compute…
Bonita Mining Company purchased land on February 1, 2025, at a cost of $1,252,100. It estimated that a total of 57,000 tons of mineral was available for mining. After it has removed all the natural resources, the company will be required to restore the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $108,900. It believes it will be able to sell the property afterwards for $121,000. It incurred developmental costs of $242,000 before it was able to do any mining. In 2025, resources removed totaled 28,500 tons. The company sold 20,900 tons. Compute the following information for 2025. a. b. C. Per unit mineral cost Total material cost of December 31, 2025, inventory Total material cost in cost of goods sold at December 31, 2025 $ $ /ton
7) Crass Spray Inc. (CSI) purchased equipment costing $60,000 on September 1, 2023. CSI made a $20,000 down payment and took out a loan for the remaining amount. Other cash expenditures related to this purchase included: Insurance during shipping: $500 Annual insurance policy: $2,400 Installation and testing costs: $600 Staff training costs on how to run the new equipment: $700 Required Determine the cost of the new equipment and record all required journal entries related to this equipment (you can ignore depreciation expense for the year).
Your answer is partially correct. Wildhorse Excavations Ltd. (WEL) operates specialized equipment for installing natural gas pipelines. WEL, which has a December 31 year end, began 2024 with a single piece of equipment that had been purchased on January 1, 2021, for $41,000 and a truck that had been purchased on January 1, 2023, for $70,000. When the equipment was purchased, WEL's management had estimated that the equipment would have a residual value of $5,000 and a useful life of six years. When the truck was purchased, management determined that it would have a useful life of four years and a residual value of $4,000. On March 31, 2024, WEL sold this piece of equipment for $30,000 cash. On April 12, 2024, WEL purchased replacement equipment with double the capacity for $78,400 cash. WEL's management determined that this equipment would have a useful life of six years and a residual value of $10,000. Prepare all necessary journal entries for the year ended December 31, 2024. Assume…
Your company is contemplating the purchase of a large stamping machine. The machine will cost $167,000. With additional transportation and installation costs of $5,000 and $11,000, respectively, the cost basis for depreciation purposes is $183,000. Its MV at the end of five years is estimated as $34,000. The IRS has assured you that this machine will fall under a three year MACRS class life category. The justifications for this machine include $45,000 savings per year in labor and $29,000 savings per year in reduced materials. The before-tax MARR is 24% per year, and the effective income tax rate is 28%. Assume the stamping machine will be used for only three years, owing to the company's losing several government contracts. The MV at the end of year three is $47,000. What is the income tax owed at the end of year three owing to depreciation recapture (capital gain)? E Click the icon to view the GDS Recovery Rates (rg) for the 3-year property class. Choose the correct answer below. O…
ProWasher’s lawyer, Anna Turney, informed you that ProWasher has a legal obligation to dismantle and remove the equipment used to produce the dishwashers and clean up the rental premises as part of the lease agreement. The equipment, costing $10 million, was put into production on June 1, 2023 and has a useful life of 120 months. The dismantling and removal costs are estimated to be $3 million. What is the accountant supposed to do?
In August 2024, Carla Vista Helicopters Ltd. purchased a new helicopter for its logging and heavy lift operations at a cost of $1.05 million. Based on past experience, management has determined that the helicopter will have a useful life of 18,000 flying hours, at which time it will have an estimated residual value of $150,000. During 2024, the helicopter was used for 1,800 flying hours, and in 2025 it was used for 2,000 flying hours. Carla Vista Helicopters has a December 31 year end and uses the units-of-production method of depreciation for its helicopters. Determine the depreciation expense on this helicopter for 2025 and its carrying amount at December 31, 2025. Depreciation expense $ Carrying amount $ 2025
During 2024, Nash constructed a small manufacturing facility specifically to manufacture one particular accessory. Nash paid the construction contractor $5,279,000 cash (which was the total contract price) and placed the facility into service on January 1, 2025. Because of technological change, Nash anticipates that the manufacturing facility will be useful for no more than 10 years. The local government where the facility is located required that, at the end of the 10-year period, Nash remediate the facility so that it can be used as a community center. Nash estimates the cost of remediation will be $632,900. Nash uses straight-line depreciation with $0 salvage value for its plant asset and a 12% discount rate for asset retirement obligations. (a) Your answer is correct. Prepare the journal entries to record the January 1, 2025, transactions. Use the Plant Assets account for the tanker depot. (Credit account titles are automatically indented when the amount is entered. Do not indent…
Da
[The following information applies to the questions displayed below] On January 1, 2024, the Excel Delivery Company purchased a delivery van for $33,000. At the end of its five-year service life, it is estimated that the van will be worth $3,000. During the five-year period, the company expects to drive the van 100,000 miles. Required: Calculate annual depreciation for the five-year life of the van using each of the following methods. 1. Straight line. Answer is complete but not entirely correct. Straight-line $ 30,000 per year
Blossom Limited purchased a machine on account on April 1, 2021, at an invoice price of $365,470. On April 2, it paid $2,170 for delivery of the machine. A one-year, $4,120 insurance policy on the machine was purchased on April 5. On April 19, Blossom paid $7,580 for installation and testing of the machine. The machine was ready for use on April 30. Blossom estimates the machine's useful life will be five years or 6,118 units with a residual value of $87,910. Assume the machine produces the following numbers of units each year: 893 units in 2021; 1,448 units in 2022; 1,426 units in 2023; 1,222 units in 2024; and 1,129 units in 2025. Blossom has a December 31 year end. (a) Your Answer Correct Answer Your answer is correct. Determine the cost of the machine. acer
On January 1, 2020, Brown Mining Enterprises purchased an existing coalmine. Brown expects to operate the mine for four years (i.e., until the end of 2023), after which it is legally required to dismantle the coalmine. Brown estimates that it will have to pay $500,000 to dismantle the mine and accomplish the other required asset retirement activities such as filling and restoring land etc. at the end of the mine’s life. The applicable general interest rate for Brown is 10% (considering its credit standing and the interest rates on its other borrowings). Prepare the journal entry to record the asset retirement obligation on January 1, 2020 and prepare the journal entries for depreciation and interest expense on december 31, 2020 2. Prepare journal entries for depreciation and interest expense on December 31, 2020.

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