Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 11.19BE
To determine
To prepare:
Given information:
Cost of testing material and supplies is $600,000.
Cost of research consultant is $100,000.
Cost of planning and designing consultant is $135,000.
Cost of laboratory equipment is $900,000.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
At the beginning of current year, Exodus Company purchased a machine for 8,000,000 and received a government grant of 2,000,000 toward the capital cost.
The machine is to be depreciated on a straight line basis over 10 years and estimated to have a residual value of 500,000 at the end of this period.
Required:
Prepare journal entries for the current year assuming the grant is accounted for as deferred income and deduction from asset.
At the beginning of current year, Apple Company purchased
a plating machine for P5,400,000.
The entity received a government grant of P400,000 toward
this capital cost.
The machine is to be depreciated on a 20% reducing balance
basis over 10 years. The estimated residual value is P200,000.
Required:
Prepare journal entries for the current year, assuming the
grant is accounted for as:
a. Deferred income
b. Deduction from asset
On January 1, 2022, Alkek Company purchased the following two machines for use in its production process.
Machine A - The cash price of this machine was $38,000. Related expenditures included: sales tax $1,700, shipping costs $150, insurance during shipping $80, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Alkek estimates that the useful life of the machine is 5 years with a $5,000 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B - The recorded cost of this machine was $160,000. Alkek estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period.
Calculate the amount of depreciation expense that Alkek Company should record for machine A and B (seperately) for each year of its useful life under the following assumptions.
(a) Alkek uses the straight-line…
Chapter 11 Solutions
Intermediate Accounting (2nd Edition)
Ch. 11 - Stephen J. Cosgrove is the Former Vice President....Ch. 11 - Prob. 11.2QCh. 11 - Prob. 11.3QCh. 11 - Prob. 11.4QCh. 11 - Will the expense/capitalization choice impact...Ch. 11 - Prob. 11.6QCh. 11 - Prob. 11.7QCh. 11 - For a long-lived operating asset acquired by...Ch. 11 - Prob. 11.9QCh. 11 - Prob. 11.10Q
Ch. 11 - Prob. 11.11QCh. 11 - What is the maximum amount of interest to be...Ch. 11 - Prob. 11.13QCh. 11 - Prob. 11.14QCh. 11 - Prob. 11.15QCh. 11 - Do firms expense all costs incurred after the...Ch. 11 - Prob. 11.17QCh. 11 - Prob. 11.18QCh. 11 - When using the double-declining balance...Ch. 11 - Prob. 11.20QCh. 11 - Will a firm recognize a loss on the income...Ch. 11 - Prob. 11.22QCh. 11 - Prob. 11.23QCh. 11 - Prob. 11.24QCh. 11 - Prob. 11.25QCh. 11 - Differentiate between a leasehold and a leasehold...Ch. 11 - Prob. 11.27QCh. 11 - Prob. 11.28QCh. 11 - Prob. 11.29QCh. 11 - Prob. 11.30QCh. 11 - Prob. 11.31QCh. 11 - Prob. 11.32QCh. 11 - Prob. 11.33QCh. 11 - Prob. 11.34QCh. 11 - Prob. 11.35QCh. 11 - Prob. 11.36QCh. 11 - Prob. 11.37QCh. 11 - Prob. 11.38QCh. 11 - Prob. 11.39QCh. 11 - Prob. 11.40QCh. 11 - In a nonmonetary exchange does a firm record the...Ch. 11 - Prob. 11.42QCh. 11 - Prob. 11.43QCh. 11 - Prob. 11.44QCh. 11 - Prob. 11.45QCh. 11 - Prob. 11.1MCCh. 11 - On January 1, Year 1, Bluebird Inc. borrowed 10...Ch. 11 - Prob. 11.3MCCh. 11 - Prob. 11.4MCCh. 11 - Prob. 11.5MCCh. 11 - Prob. 11.6MCCh. 11 - Prob. 11.7MCCh. 11 - Prob. 11.8MCCh. 11 - Determining Acquisition Cost. Haply, Inc. incurred...Ch. 11 - Determining Acquisition Cost. Tarpley, Inc....Ch. 11 - Prob. 11.3BECh. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Prob. 11.6BECh. 11 - Prob. 11.7BECh. 11 - Prob. 11.8BECh. 11 - Depreciation, Straight-Line Method. Hermit...Ch. 11 - Prob. 11.10BECh. 11 - Prob. 11.11BECh. 11 - Prob. 11.12BECh. 11 - Prob. 11.13BECh. 11 - Derecognition Due to Abandonment. Greene Corp....Ch. 11 - Prob. 11.15BECh. 11 - Prob. 11.16BECh. 11 - Prob. 11.17BECh. 11 - Prob. 11.18BECh. 11 - Prob. 11.19BECh. 11 - Prob. 11.20BECh. 11 - Leasehold Improvements. At the beginning of its...Ch. 11 - Determining Acquisition Cost. St Charles Flooring...Ch. 11 - Prob. 11.2ECh. 11 - Prob. 11.3ECh. 11 - Acquiring an Asset with a Note Payable (Deferred...Ch. 11 - Prob. 11.5ECh. 11 - Prob. 11.6ECh. 11 - Capitalization of Interest, Specific and General...Ch. 11 - Prob. 11.8ECh. 11 - Prob. 11.9ECh. 11 - Capitalization of Interest, Specific and General...Ch. 11 - Prob. 11.11ECh. 11 - Expensing versus Capitalizing ExpendituresAnalysis...Ch. 11 - Depreciation Methods, Disposal. Kurtis Koal...Ch. 11 - Prob. 11.14ECh. 11 - Depreciation Methods, Partial-Year Depreciation....Ch. 11 - Prob. 11.16ECh. 11 - Depreciation Methods. Ace Manufacturing, Inc....Ch. 11 - Prob. 11.18ECh. 11 - Depreciation Methods, Partial-Year Depreciation,...Ch. 11 - Prob. 11.20ECh. 11 - Partial-Year Depreciation, Sale of Property,...Ch. 11 - Prob. 11.22ECh. 11 - Disclosure of Property, Plant, and Equipment. Use...Ch. 11 - Disclosure of Property, Plant, and Equipment,...Ch. 11 - Prob. 11.25ECh. 11 - Research and Development Activities. During the...Ch. 11 - Prob. 11.27ECh. 11 - Goodwill Computation, Acquisition of Intangibles,...Ch. 11 - Prob. 11.29ECh. 11 - Prob. 11.30ECh. 11 - Prob. 11.31ECh. 11 - Prob. 11.32ECh. 11 - Prob. 11.33ECh. 11 - Prob. 11.34ECh. 11 - Prob. 11.35ECh. 11 - Prob. 11.36ECh. 11 - Prob. 11.37ECh. 11 - Exchanges Lacking Commercial Substance, Cash...Ch. 11 - Prob. 11.39ECh. 11 - Prob. 11.41ECh. 11 - Prob. 11.42ECh. 11 - Note Payable Exchanged for a Plant Asset (Deferred...Ch. 11 - Prob. 11.2PCh. 11 - Prob. 11.3PCh. 11 - Depreciation Methods and Depreciation Schedules....Ch. 11 - Prob. 11.5PCh. 11 - Disposals of Long-Term Operating AssetsAnalysis,...Ch. 11 - Goodwill and Bargain Purchase Computations. The...Ch. 11 - Prob. 11.8PCh. 11 - Prob. 11.9PCh. 11 - Prob. 11.10PCh. 11 - Prob. 11.11PCh. 11 - Judgment Case 1: Property, Plant, and Equipment:...Ch. 11 - Prob. 2JCCh. 11 - Financial Statement Analysis Case Financial...Ch. 11 - Surfing the Standards Cases Surfing the Standards...Ch. 11 - Prob. 2SSCCh. 11 - Surfing the Standards Case 3: Involuntary...Ch. 11 - Prob. 4SSCCh. 11 - Prob. 5SSCCh. 11 - Prob. 1BCCCh. 11 - Prob. 2BCC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Recording Subsequent Expenditures The plant building of Xon Corporation is old (estimated remaining useful life is 12 years) and needs continuous maintenance and repairs. The company’s accounts show that the building originally cost $300,000; and accumulated depreciation was $200,000 at the beginning of the current year. During the current year, expenditures relating to the plant building are made. Prepare the journal entry to record each of the following expenditures , assuming all items are paid in cash.Instructions Round your answers to the nearest whole number Record debit accounts in alphabetical order using the first letter of the account name. 1. Continuing, frequent, and low-cost repairs: $17,000 Account Name Dr. Cr. 2. Added a new storage shed attached to the building; estimated useful life of 8 years: $36,000 Account Name Dr. Cr. 3. Removed roof with original cost, $40,000; replaced it with…arrow_forwardOn January 1, 2022, Concord Company purchased the following two machines for use in its production process. The cash price of this machine was $37,500. Related expenditures also paid in cash included: sales tax $2,000, shipping costs $150, insurance during shipping $110, installation and testing costs $120, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Concord estimates that the useful life of the machine is 5 years with a $4,500 salvage value remaining at the end of that time period. Assume that the Machine A: straight-line method of depreciation is used. The recorded cost of this machine was $180,000. Concord estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period. Machine B: (a) Prepare the following for Machine A. (Round answers to O decimal places, eg. 5,125. List all debit entries before credit entries. Credit account titles are automatically indented when…arrow_forward7) Crass Spray Inc. (CSI) purchased equipment costing $60,000 on September 1, 2023. CSI made a $20,000 down payment and took out a loan for the remaining amount. Other cash expenditures related to this purchase included: Insurance during shipping: $500 Annual insurance policy: $2,400 Installation and testing costs: $600 Staff training costs on how to run the new equipment: $700 Required Determine the cost of the new equipment and record all required journal entries related to this equipment (you can ignore depreciation expense for the year).arrow_forward
- The following costs were incurred by Mark Corporation during 2020: Legal fees paid to attorneys in connection with a patent application related to a new invention developed by the company's laboratory personnel: $40,000. Salaries of personnel involved in searching for applications of new research findings: $150,000. Cost of machinery acquired on January 1, 2020: $355,000. The machinery will be used in a current research and development project, as well as several other R&D projects over the next eight years, after which the machine is expected to be sold for $15,000. Mark Corporation uses straight-line depreciation. Costs of design, construction, and testing of preproduction prototypes of potential new product lines for the company: $70,000. Cost of developing a valuable new product that was successfully patented: $100,000. Cost of marketing research to promote the new product: $60,000. Required:Calculate the total research and development expense that should appear in Mark's…arrow_forwardOn January 1, 2022, Windsor Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $43,500. Related expenditures also paid in cash included: sales tax $3,550, shipping costs $150, insurance during shipping $50, installation and testing costs $100, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Windsor estimates that the useful life of the machine is 5 years with a $5,250 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. Machine B: The recorded cost of this machine was $180,000. Windsor estimates that the useful life of the machine is 4 years with a $16,800 salvage value remaining at the end of that time period. Calculate the amount of depreciation expense that Windsor should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per…arrow_forwardOn January 1, 2022, Windsor Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $43,500. Related expenditures also paid in cash included: sales tax $3,550, shipping costs $150, insurance during shipping $50, installation and testing costs $100, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Windsor estimates that the useful life of the machine is 5 years with a $5,250 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. Machine B: The recorded cost of this machine was $180,000. Windsor estimates that the useful life of the machine is 4 years with a $16,800 salvage value remaining at the end of that time period. (a) Prepare the following for Machine A. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is…arrow_forward
- Oaktree Company purchased new equipment and made the following expenditures: Purchase price Sales tax Freight charges for shipment of equipment Insurance on the equipment for the first year Installation of equipment The equipment, including sales tax, was purchased on open account, with payment due in 30 days. The other expenditures listed above were paid in cash. Required: Prepare the necessary journal entries to record the above expenditures. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheetarrow_forwardBowman Corporation is considering an investment in special-purpose equipment to enable the company to obtain a five-year government contract for the manufacture of a special item. The equipment costs $500,000 and would have no salvage value when the contract expires at the end of the five years. Estimated annual operating results of the project are as follows. All revenue and all expenses other than depreciation will be received or paid in cash in the same period as recognized for accounting purposes. Compute the following for Bowman’s proposal to undertake the contract work. Payback period. Return on average investment. Net present value of the proposal to undertake contract work, discounted at an annual rate of 10 percent.arrow_forwardDuring the current year, Benguet Company purchased a secondhand machine at a price of P300,000. A cash down payment of P50,000 was made and a two-year, non interest bearing note was issued for the balance. Recent transactions involving similar machinery indicate that the used machine has a secondhand market value of P240,000. A new machine would cost P400,000. The following costs were incurred on the machine during the year: Cost of removing the old machine 2,000Cash proceeds form the sale of the old machine 1,200Cost of spare parts purchased and set aside from breakdowns during the first two years of normal use of the machine 20,000Cost of labor to install the machine 4,000Cost of testing the machine prior to use 1,800Cost of hauling the machine from the vendor’s place of business to the company’s premises 5,000Cost of repairing the damage to the machine when it was dropped during the installation 3,000Repairs incurred during the first year of operations 6,000Safety devices added to…arrow_forward
- Memanarrow_forwardDuring the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated five machines for $100,000 to improve efficiency in production of their remaining useful life of five years Low-cost repairs throughout the year totaled $70,000 Replaced a broken gear on a machine for $10,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?arrow_forwardDuring the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated seven machines for $250,000 to improve efficiency in production of their remaining useful life of eight years Low-cost repairs throughout the year totaled $79,000 Replaced a broken gear on a machine for $6,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Asset impairment explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=lWMDdtHF4ZU;License: Standard Youtube License