Answered: the atkins museum recently hired a new…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 4PB: Pocket Umbrella, Inc. is considering producing a new type of umbrella. This new pocket-sized...

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Chilton Peripherals manufactures printers, scanners, and other computer peripheral equipment. In the past, thecompany purchased equipment used in manufacturing from an outside vendor. In March 2018, Chilton decidedto design and build equipment to replace some obsolete equipment. A section of the manufacturing plant was setaside to develop and produce the equipment. Additional personnel were hired for the project. The equipment wascompleted and ready for use in September.Required:1. In general, what costs should be capitalized for a self-constructed asset?2. Discuss two alternatives for the inclusion of overhead costs in the cost of the equipment constructed by Chilton. Which alternative is generally accepted for financial reporting purposes?3. Under what circumstance(s) would interest be included in the cost of the equipment?
Last year (2016), Bramble Condos installed a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently returned from an industry equipment exhibition where he watched a computerized elevator demonstrated. He was impressed with the elevator's speed, comfort of ride, and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new elevator. In addition, he asked the company’s accountant to provide him with cost data on the company’s elevator. This information is presented below. Old Elevator New Elevator Purchase price $103,500 $159,000 Estimated salvage value 0 0 Estimated useful life 5 years 4 years Depreciation method Straight-line Straight-line Annual operating costs other than depreciation: Variable $34,000 $11,000 Fixed 23,900 8,200 Annual revenues are…
SK Ltd has acquired a new machine which it has had installed in its factory. Assess which of the following items should be capitalised into the cost of the Machine. Provide a reason for your conclusions in detail as per IAS 16 measurement recognition. Labour and travel costs for managers to inspect possible new machines and for negotiating for a new machine Freight costs and insurance to get the new machine to the factory Costs for renovating a section of the factory, in anticipation of the new machine’s arrival, to ensure that all the other parts of the factory will have easy access to the new machine Cost of cooling equipment to assist in the efficient operation of the new machine Costs of repairing the factory door, which was damaged by the installation of the new machine Training costs of workers who will use the machine
Corella Ltd has acquired a new machine which it has had installed in its factory. Assess which of the following items should be capitalised into the cost of the building. Provide a reason for your conclusions as per LKAS 16. Labour and travel costs for managers to inspect possible new machines and for negotiating for a new machine Freight costs and insurance to get the new machine to the factory Costs for renovating a section of the factory, in anticipation of the new machine’s arrival, to ensure that all the other parts of the factory will have easy access to the new machine Cost of cooling equipment to assist in the efficient operation of the new machine Costs of repairing the factory door, which was damaged by the installation of the new machine Training costs of workers who will use the machine
Corella Ltd has acquired a new machine which it has had installed in its factory. Assess which of the following items should be capitalised into the cost of the building. Provide a reason for your conclusions as per IAS 16. Labour and travel costs for managers to inspect possible new machines and for negotiating for a new machine Freight costs and insurance to get the new machine to the factory Costs for renovating a section of the factory, in anticipation of the new machine’s arrival, to ensure that all the other parts of the factory will have easy access to the new machine Cost of cooling equipment to assist in the efficient operation of the new machine Costs of repairing the factory door, which was damaged by the installation of the new machine Training costs of workers who will use the machine
Arkitektyukid hired a consulting firm three (3) months ago to redesign the information system used bythe architects. The architects will be able to use state-of-the-art computer-aided design (CAD) programsto help in designing the products. Further, they will be able to store these designs on a network serverwhere they and other architects may be able to call them back up for future designs with similarcomponents. The consulting firm has been instructed to develop the system without disrupting thearchitects. Top management believes that the best route is to develop the system and then to “introduce”it to the architects during a training session. Management does not want the architects to spendprecious billable hours guessing about the new system or putting work off until the new system isworking. Thus, the consultants are operating in a back room under a shroud of secrecy. Required:a. Do you think that management is taking the best course of action for the announcement of the newsystem?…
St. John's Hospital has decided to move to a new location to better serve the surrounding community. The project involves constructing a new hospital and making it operational. Judy Kramer, the project manager for the St. John's Hospital project, divided the project into two modules. She assigned John Stewart the overall responsibility for the Organizing and Site Preparation module and Sarah Walker the responsibility for the Physical Facilities and Infrastructure module. The project team developed the precedence relationships, activity time estimates, and the activity responsibilities shown in the following table: T 1 Activity ST. JOHN'S HOSPITAL PROJECT START ORGANIZING and SITE PREPARATION A. Select administrative staff B. Select site and survey C. Select medical equipment D. Prepare final construction plans E. Bring utilities to site F. Interview applicants for nursing and support staff PHYSICAL FACILITIES and INFRASTRUCTURE G. Purchase and deliver equipment H. Construct hospital I.…
The Chief Information Officer (CIO) and the Managing Director (MD) of Illustrious Limited recently had the following conversation regarding the development of a new information system for the company: CIO: The way to go about the analysis is to first examine the old system, such as reviewing key documents and observing the workers performing their tasks. Then we can determine which aspects are working well and which should be preserved. MD: We have been through these types of projects before, and what always ends up happening is that we do not get the new system we are promised. Instead we get a modified version of the old system. CIO: I can assure you that will not happen this time. My team just want a thorough understanding of what is working well and what is not. MD: I would feel much more comfortable if we first started with a list of our requirements. We should spend more time in determining what exactly we want the system to do upfront. Then your team can come in and determine…
The Chief Information Officer (CIO) and the Managing Director (MD) of Illustrious Limited recently had the following conversation regarding the development of a new information system for the company: CIO: The way to go about the analysis is to first examine the old system, such as reviewing key documents and observing the workers performing their tasks. Then we can determine which aspects are working well and which should be preserved. MD: We have been through these types of projects before, and what always ends up happening is that we do not get the new system we are promised. Instead we get a modified version of the old system. CIO: I can assure you that will not happen this time. My team just want a thorough understanding of what is working well and what is not. MD: I would feel much more comfortable if we first started with a list of our requirements. We should spend more time in determining what exactly we want the system to do upfront. Then your team can come in and determine…
The Chief Information Officer (CIO) and the Managing Director (MD) of Illustrious Limited recently had the following conversation regarding the development of a new information system for the company: CIO: The way to go about the analysis is to first examine the old system, such as reviewing key documents and observing the workers performing their tasks. Then we can determine which aspects are working well and which should be preserved. MD: We have been through these types of projects before, and what always ends up happening is that we do not get the new system we are promised. Instead, we get a modified version of the old system. CIO: I can assure you that this will not happen this time. My team just wants a thorough understanding of what is working well and what is not. MD: I would feel much more comfortable if we first started with a list of our requirements. We should spend more time determining what exactly we want the system to do upfront. Then your team can come in and…
The Chief Information Officer (CIO) and the Managing Director (MD) of Illustrious Limited recently had the following conversation regarding the development of a new information system for the company: CIO: The way to go about the analysis is to first examine the old system, such as reviewing key documents and observing the workers performing their tasks. Then we can determine which aspects are working well and which should be preserved. MD: We have been through these types of projects before, and what always ends up happening is that we do not get the new system we are promised. Instead, we get a modified version of the old system. CIO: I can assure you that this will not happen this time. My team just wants a thorough understanding of what is working well and what is not. MD: I would feel much more comfortable if we first started with a list of our requirements. We should spend more time determining what exactly we want the system to do upfront. Then your team can come in and…
The city of Papagos, Arizona, had a deteriorating bridge in need of repair on a prominent public roadway. The city posted notices seeking proposals for an artistic bridge design and reconstruction. Davidson Masonry, LLC, which was owned and managed by Carl Davidson and his wife, Marilyn Rowe, decided to submit a bid to create a decorative concrete structure that incorporated artistic metalwork. They contacted Shana Lafayette, a local sculptor who specialized in large-scale metal creations, to help them design the bridge. The city selected their bridge design and awarded them the contract for a commission of $184,000.Davidson Masonry and Lafayette then entered into an agreement to work together on the bridge project. Davidson Masonry agreed to install and pay for concrete and structural work, and Lafayette agreed to install the metalwork at her expense. They agreed that overall profits would be split, with 25 percent going to Lafayette and 75 percent going to Davidson Masonry.…

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