Tree Lovers Inc. purchased 100 acres of woodland in which the company intends to harvest the complete forest, leaving the land barren and worthless. Tree Lovers paid $2,600,000 for the land. Tree Lovers will sell the lumber as it is harvested andexpects to deplete it over five years (20 acres in year one, 31 acres in year two, 23 acres in year three, 11 acres in year four, and 15 acres in year five).Calculate the depletion expense for the next five years.Year 1Year 2%$4Year 3Year 4Year 5Prepare the journal entry for year one. If an amount box does not reguire an entry, leave it blank.00

Depletion refers to an accrual accounting method used to determine the expense of extracting natural…

Answered: Tree Lovers Inc. purchased 100 acres of…

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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New Morning Bakery is in the process of closing its operations. It sold Its two-year-old bakery ovens to Great Harvest Bakery for $700,000. The ovens originally cost $910,000, had an estimated service life of 10 years, had an estimated residual value of $60,000, and were depreciated using straight-line depreciation. Complete the requirements below for New Morning Bakery. 4. Record the sale of the ovens at the end of the second year. (If no entry is required for a transaction/event, select "No Journal Entry Required" In the first account fleld.) View transaction list Journal entry worksheet < Record the sale of ovens. Note: Enter debits before credits.
Cullumber, Inc. is considering the purchase of a warehouse directly across the street from its manufacturing plant. Cullumber currently warehouses its inventory in a public warehouse across town. Rent on the warehouse and delivering and picking up inventory cost Cullumber $50880 per year. The building will cost Cullumber $477000. Cullumber will depreciate the building for 20 years. At the end of 20 years, the building will have a $132500 salvage value. Cullumber's required rate of return is 12%. Click here to view the factor table. Using the present value tables, the building's net present value is (round to the nearest dollar) O $1017600. O $46077. O $393783. O $-83217.
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Tree Lovers Inc. purchased 100 acres of woodland in which the company intends to harvest the complete forest, leaving the land barren and worthless. Tree Lovers paid $3,000,000 for the land. Tree Lovers will sell the lumber as it is harvested and expects to deplete it over five years (23 acres in year one, 30 acres in year two, 24 acres in year three, 10 acres in year four, and 13 acres in year five). Calculate the depletion expense for the next five years. Year 1 $ Year 2 Year 3 $ Year 4 Year 5 Prepare the journal entry for year one. If an amount box does not require an entry, leave it blank. %24 %24 %24 %24 %24
Lou Lou and Company purchased a piece of machinery 2 years ago for $50,000 and has depreciation to date of $15,000. The fair market value of the asset is $30,000, but the company believes it can achieve $34,000 in net future cash flows from the asset. Costs to dispose of the asset is $200. Assuming the asset is held for use, determine if the asset is impaired. If so, what is the amount of the write-off? The asset is impaired and Lou Lou should record a $1,000 loss on impairment. The asset is impaired and Lou Lou should record a $5,200 loss on impairment. The asset is NOT impaired. The asset is impaired and Lou Lou should record a $5,000 loss on impairment.
East Mill Pizzeria is closing its business. It sold its two-year- old pizza ovens to Marco's Italian Restaurant for $600,000. Originally, East Mill acquired the pizza ovens at a cost of $800,000. The ovens had an estimated useful life of 10 years, an estimated residual value of $50,000, and were depreciated using straight-line depreciation. Complete the requirements below for East Mill Pizzeria. Required: 1. Calculate the balance in the accumulated depreciation account at the end of the second year. Accumulated depreciation
Hampton Inc. purchased a machine to use in its business. The machine is estimated to have an economic life of 10 (ten) years before it becomes obsolete. The company expects to use the machine for 4 (four) years before it sells the machine to another company. Hampton uses the straight-line depreciation method. Question: How many years should Hampton depreciate this asset over? (4,7,10, or 14)
East Mill Pizzeria is closing its business. It sold its two-year-old pizza ovens to Marco's Italian Restaurant for $600,000. Originally, East Mill acquired the pizza ovens at a cost of $800,000. The ovens had an estimated useful life of 10 years, an estimated residual value of $50,000, and were depreciated using straight-line depreciation. Complete the requirements below for East Mill Pizzeria. 4. Record the sale of the ovens at the end of the second year (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the sale of ovens. Note: Enter debits before credits, Transaction General Journal Debit Credit Record entry Clear entry View general journal
Burn Incorporated purchased a $600,000 machine to manufacture a specialty tap for electrical equipment. The tap is in high demand and Burn can sell all that it could manufacture for the next 10 years. To encourage capital investments, the government exempts taxes on profits from new investments in this type of machinery. This legislation most likely will remain in effect in the foreseeable future. The equipment is expected to have 10 years of useful life and no salvage value at the end of this 10-year period. The firm uses straight-line depreciation. The net cash inflow is expected to be $146,000 each year. Burn uses a discount rate of 11% in evaluating its capital investments. The estimated accounting (book) rate of return (to two decimal places) based on average investment for this proposed investment is: Multiple Choice 13.40%. 14.67%. 26.12%. 28.67%. 51.57%.
New Morning Bakery is in the process of closing its operations. It sold its two-year-old bakery ovens to Great Harvest Bakery for $640,000. The ovens originally cost $844,000, had an estimated service life of 10 years, had an estimated residual value of $54,000, and were depreciated using straight-line depreciation. Complete the requirements below for New Morning Bakery. 2. Calculate the book value of the ovens at the end of the second year. Book value ►► F10 888 FA FB * ES F7 吕口 # $ % 7 8 9 2 3 4 5 P W E R Y G H K L S F > C V N M command ommand D.
For specialized devices for use with its latest GPS / GIS system, Freeman Engineering charged $28,500. Using MACRS depreciation, the equipment was depreciated over a 3 year recovery period. After 2 years, the company sold the equipment for $5000 when it bought an improved system. (a) Assess the value of the recapture of depreciation or the capital loss involved in the asset sale. (b) What tax impact is that number going to have?

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