Tiger Mfg. owns a manufacturing facility that is currently sitting idle. The facility is located on a piece of land that originally cost $149,000. The facility itself cost $1,490,000 to build. As of now, the book value of the land and the facility are $149,000 and $1,248,000, respectively. The firm owes no debt on either the land or the facility at the present time. The firm received a bid of $1,240,000 for the land and facility last week. The firm's management rejected this bid even though they were told that it is a reasonable offer in today's market. If the firm were to consider using this land and facility in a new project, what cost, if any, should it include in the project analysis?

Tiger Mfg. owns a manufacturing facility that is currently sitting idle. The facility is located on a piece of land that originally cost $149,000. The facility itself cost $1,490,000 to build. As of now, the book value of the land and the facility are $149,000 and $1,248,000, respectively. The firm owes no debt on either the land or the facility at the present time. The firm received a bid of $1,240,000 for the land and facility last week. The firm's management rejected this bid even though they were told that it is a reasonable offer in today's market. If the firm were to consider using this land and facility in a new project, what cost, if any, should it include in the project analysis?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Consider each of the following independent situations: a. GYT Co. exchanges a machine that cost $4,000 and has accumulated amortization of $2,560 for a similar machine. GYT also receives $25 in the exchange. The fair market value of the old asset is $750. The fair market value of the new asset is $725. There is no commercial substance to the transaction. b. FST Co. exchanges a machine that cost $4,000 and has accumulated amortization of $3,560 for a similar machine. FST also receives $25 in the exchange. The fair market value of the old asset is $750. The fair market value of the new asset is $725. There is no commercial substance to the transaction. c. LKC Co. pays $250 and exchanges a machine that cost $3,000 and has accumulated amortization of $1,900 for a similar machine. The fair market value of the old asset is undeterminable. The fair market value of the new asset is $690. The transaction has commercial substance. d. HRT Co. pays $250 and exchanges a…
Information Processing, Inc. (IPI) exchanges its used machine for a new machine with Jerrod Business Solutions Inc. The exchange has commercial substance. IPI’s used machine has a book value of $8,000 (original cost $12,000 less $4,000 accumulated depreciation) and a fair value of $6,000. The new machine has a fair value of $16,000. IPI also pays Jerrod Business Solutions $7,000 cash in the transaction. Accounting Issue(s): What is the correct amount that IPI should record for the machine it acquired in the exchange with Jerrod Business Solutions? Question 1: What is the correct amount that IPI should record for the machine it acquired in the exchange with Jerrod Business Solutions? $6,000 $7,000 $8,000 $13,000 $15,000 $16,000
On March 31, 2021, Susquehanna Insurance purchased an office building for $10,200,000. Based on their relative fair values, one-third of the purchase price was allocated to the land and two-thirds to the building. Furniture and fixtures were purchased separately from office equipment on the same date for $1,300,000 and $800,000, respectively. The company uses the straight-line method to depreciate its buildings and the double-declining-balance method to depreciate all other depreciable assets. The estimated useful lives and residual values of these assets are as follows: ServiceLife ResidualValue Building 25 5% of cost Furniture and fixtures 10 5% of cost Office equipment 5 $40,000 Required:Calculate depreciation for 2021 and 2022.
Brix Co owns a building which it uses as its office, warehouse and garage. The land is carried as a separate non-current tangible asset in the statement of financial position. Brix Co has a policy of regularly revaluing its tangible non-current assets. The original cost of the building on 1 January 2006 was $2.1 million, and at that date it was estimated to have a useful economic life of 20 years, with no residual value. The company adopted the revaluation model of IAS 16 in 2012 and the building was valued at subsequent valuations as follows: 31 December 2012 $2.6 million 31 December 2015 $2.4million At each revaluation date the remaining useful life remains unchanged. Brix Co also owns a brand name, which it acquired 1 January 2014 for $1 million. The brand name is being amortised over 10 years and has a carrying amount at 31 December 2015 of $800,000. A brand specialist valued Miami's brand name at market value of $780,000 on the same date and Miami's chief accountant calculated…
Keating Co. is considering disposing of equipment with a cost of $74,000 and accumulated depreciation of $51,800. Keating Co. can sell the equipment through a broker for $33,000, less a 7% broker commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $49,000. Keating will incur repair, insurance, and property tax expenses estimated at $12,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is Oa. $4,417 Ob. $7,572 Oc. $9,465 Od. $6,310 Previous Next 7:36 PM 12/13/2020 CP DELL
Keating Co. is considering disposing of equipment with a cost of $66,000 and accumulated depreciation of $46,200. Keating Co. can sell the equipment through a broker for $32,000, less a 5% broker commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $45,000. Keating will incur repair, insurance, and property tax expenses estimated at $9,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is
Keating Co. is considering disposing of equipment with a cost of $71,000 and accumulated depreciation of $49,700. Keating Co. can sell the equipment through a broker for $32,000 less 7% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $47,000. Keating will incur repair, insurance, and property tax expenses estimated at $9,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is A:$5,768 B:$8,240 C:$9,888 D:$12,360
Brix Co owns a building which it uses as its office, warehouse and garage. The land is carried as a separate non-current tangible asset in the statement of financial position. Brix Co has a policy of regularly revaluing its tangible non-current assets. The original cost of the building on 1 January 2006 was $2.1 million, and at that date it was estimated to have a useful economic life of 20 years, with no residual value. The company adopted the revaluation model of IAS 16 in 2012 and the building was valued at subsequent valuations as follows: 31 December 2012 $2.6 million 31 December 2015 $2.4million At each revaluation date the remaining useful life remains unchanged. Brix Co also owns a brand name, which it acquired 1 January 2014 for $1 million. The brand name is being amortised over 10 years and has a carrying amount at 31 December 2015 of $800,000. A brand specialist valued Miami's brand name at market value of $780,000 on the same date and Miami's chief accountant calculated…
Corning Industries owns a patent for which it paid $77,000. At the end of the current year, accumulated amortization on the patent totaled $14,000. Due to adverse economic conditions, Corning’s management determined that it should assess whether an impairment loss should be recognized for the patent. The estimated undiscounted future cash flows to be provided by the patent total $45,000, and the patent's fair value is $30,000. (a) What is the amount of the impairment loss, if any, on the patent at the end of the current year? (b) What is the book value of the patent after any impairment loss is recorded?
Yokoyama Company owns a machine with a cost of $92,000 and accumulated depreciation of $18,500 that can be sold for $66,000 less a 5% sales commission. Alternatively, Yokoyama Company can lease the machine to another company for 3 years for a total of $74,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Yokoyama Company on the machine would total $10,500 over the 3 years. Prepare a differential analysis on February 21 as to whether Yokoyama Company should lease (Alternative 1) or sell (Alternative 2) the machine. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Machine (Alt. 1) or Sell Machine (Alt. 2) February 21 Differential Effect Lease Sell Machine Machine (Alternative 2) (Alternative 1) (Alternative 2) Revenues Costs Profit (loss) Should Yokoyama Company lease (Alternative 1) or sell (Alternative 2) the machine?
Keating Co. is considering disposing of equipment that cost $65,000 and has $45,500 of accumulated depreciation to date. Keating Co. can sell the equipment through a broker for $33,000 less a 7% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $45,000. Keating will incur repair, insurance, and property tax expenses estimated at $9,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential profit or loss from the sell alternative is a

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