Judgment Case 10–3 Self-constructed assets • LO10–7 Chilton Peripherals manufactures printers, scanners, and other computer peripheral equipment. In the past, the company purchased equipment used in manufacturing from an outside vendor. In March 2018, Chilton decided to design and build equipment to replace some obsolete equipment. A section of the manufacturing plant was set aside to develop and produce the equipment. Additional personnel were hired for the project. The equipment was completed 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?
Judgment Case 10–3 Self-constructed assets • LO10–7 Chilton Peripherals manufactures printers, scanners, and other computer peripheral equipment. In the past, the company purchased equipment used in manufacturing from an outside vendor. In March 2018, Chilton decided to design and build equipment to replace some obsolete equipment. A section of the manufacturing plant was set aside to develop and produce the equipment. Additional personnel were hired for the project. The equipment was completed 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?
Chilton Peripherals manufactures printers, scanners, and other computer peripheral equipment. In the past, the company purchased equipment used in manufacturing from an outside vendor. In March 2018, Chilton decided to design and build equipment to replace some obsolete equipment. A section of the manufacturing plant was set aside to develop and produce the equipment. Additional personnel were hired for the project. The equipment was completed 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?
Definition Definition Total cost of procuring or producing a product or the cost that an individual or business owner undertakes for the manufacturing of goods.
I need help with this financial accounting question using standard accounting techniques.
Pinnacle Corp. reports sales of $15 million for Year 2, with a gross
profit margin of 35%. 25% of Pinnacle's sales are on credit.
Item
Year I
Accounts Receivable
$200,000
Year 2
$250,000
$1,200,000 $1,500,000
$1,000,000 $1,100,000
Inventory
Accounts Payable
What is the accounts payable days outstanding at the end of Year 2
for Pinnacle Corp.?
I am searching for the correct answer to this financial accounting problem with proper accounting rules.
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