Zaz Ltd purchased three assets during the year ended December 31, 2023: Equipment was purchased on March 31 for $26, 500. In addition to the purchase price, Zaz paid $1,325 inGST and $1,590 in PST. Shipping was paid by Zaz at a cost of $600. A warehouse was constructed at a cost of $150,000. Legal fees were $1,250. Insurance of $12,000 wasprepaid on January 1 and construction finished on September 1. Machinery costing $ 40,000 was purchased on July 1. Installation and retrofitting costs were $4,000Required:1. Calculate the cost of each asset to be recorded on the Statement of Financial Position.2. Calculate and journalize depreciation at December 31, 2023 for each asset. Zaz prorates thefirst years depreciation for months in use and 10,000 units are produced.a. Equipment uses single declining balance (residual value of $3,000; useful life of 10 years). b. Warehouse uses straight line depreciation (residual value of $10,000; useful life of 25 years). c. Machinery uses the units of production method of depreciation (residual value of $2,500; useful life of 6 years and expected inventory production of 160,000 units).3. Show the expected Statement of Financial Position presentation of the three assets atDecember 31, 2024 (assuming to changes to asset cost i.e., no purchases or disposals ofassets) if Zaz produced 40,000 units in 2024.4. If Zaz sells the warehouse on March 31, 2025 for $ 125,000. Journalize depreciation for 2025and the sale of the warehouse.
Zaz Ltd purchased three assets during the year ended December 31, 2023: Equipment was purchased on March 31 for $26, 500. In addition to the purchase price, Zaz paid $1,325 inGST and $1,590 in PST. Shipping was paid by Zaz at a cost of $600. A warehouse was constructed at a cost of $150,000. Legal fees were $1,250. Insurance of $12,000 wasprepaid on January 1 and construction finished on September 1. Machinery costing $ 40,000 was purchased on July 1. Installation and retrofitting costs were $4,000Required:1. Calculate the cost of each asset to be recorded on the Statement of Financial Position.2. Calculate and journalize depreciation at December 31, 2023 for each asset. Zaz prorates thefirst years depreciation for months in use and 10,000 units are produced.a. Equipment uses single declining balance (residual value of $3,000; useful life of 10 years). b. Warehouse uses straight line depreciation (residual value of $10,000; useful life of 25 years). c. Machinery uses the units of production method of depreciation (residual value of $2,500; useful life of 6 years and expected inventory production of 160,000 units).3. Show the expected Statement of Financial Position presentation of the three assets atDecember 31, 2024 (assuming to changes to asset cost i.e., no purchases or disposals ofassets) if Zaz produced 40,000 units in 2024.4. If Zaz sells the warehouse on March 31, 2025 for $ 125,000. Journalize depreciation for 2025and the sale of the warehouse.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Zaz Ltd purchased three assets during the year ended December 31, 2023: Equipment was
purchased on March 31 for $26, 500. In addition to the purchase price, Zaz paid $1,325
inGST and $1,590 in PST. Shipping was paid by Zaz at a cost of $600. A warehouse was
constructed at a cost of $150,000. Legal fees were $1,250. Insurance of $12,000
wasprepaid on January 1 and construction finished on September 1. Machinery costing $
40,000 was purchased on July 1. Installation and retrofitting costs were $4,000Required:1.
Calculate the cost of each asset to be recorded on the Statement of Financial Position.2.
Calculate and journalize depreciation at December 31, 2023 for each asset. Zaz prorates
thefirst years depreciation for months in use and 10,000 units are produced.a. Equipment
uses single declining balance (residual value of $3,000; useful life of 10 years). b.
Warehouse uses straight line depreciation (residual value of $10,000; useful life of 25 years).
c. Machinery uses the units of production method of depreciation (residual value of $2,500;
useful life of 6 years and expected inventory production of 160,000 units).3. Show the
expected Statement of Financial Position presentation of the three assets atDecember
31, 2024 (assuming to changes to asset cost i.e., no purchases or disposals ofassets) if Zaz
produced 40,000 units in 2024.4. If Zaz sells the warehouse on March 31, 2025 for $
125,000. Journalize depreciation for 2025and the sale of the warehouse.
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education