FINANCIAL ACCOUNTING 9TH
16th Edition
ISBN: 9781308821672
Author: Libby
Publisher: MCG/CREATE
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 8.3P
1.
To determine
Ascertain the cost of Machines A, B and C.
2.
To determine
Prepare the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Sub.... Account
Required information
P8-3 Computing the Acquisition Cost and Recording Depreciation under Three Alternative Methods LO8-
2, 8-3
[The following information applies to the questions displayed below.)
At the beginning of the year, Plummer's Sports Center bought three used fitness machines from Advantage, Inc. The
machines immediately were overhauled, installed, and started operating. The machines were different; therefore, each
had to be recorded separately in the accounts.
Machine A Machine D
Machine C
Amount paid tor asset
Installation costa
Renovation costs prior to use
$ 27,200 S 34,000
1,500
2,900
1,400
1,400
$ 22,300
1,000
1,900
By the end of the first year, each machine had been operating 6,200 hours.
P8-3 Part 2
2. Prepare the entry to record depreciation expense at the end of year 1, assuming the following. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field.)
ESTIMATES
Residual
Value
$1,500
Depreciation Method
Hachine…
Question text
Depreciation Choices and Outcome.Mulligan Co. purchased a new machine on January 1. The following information pertains to the purchase:
Life of asset
5 years
Salvage value
$3,000
Purchase price
18,000
Sales tax
1,000
Freight cost
800
Electrical set-up
700
Custom programming
500
Estimated annual labor savings
3,500
Additional revenue generated
8,000
a. Determine the capitalized cost of the new machine$Answerb. Compute annual depreciation, accumulated depreciation and the machine's book value for the first three year assuming:i. Straight-line depreciationii. Double-declining-balance method
Straight-Line Depreciation
Double-Declining Balance
DepreciationExpense
AccumulatedDepreciation
Book Value atYear-end
DepreciationExpense
AccumulatedDepreciation
Book Value atYear-End
Year 1
Year 2
Year 3
c. Assume the machine is sold for $8,000 at the end of the third year after depreciation…
Chapter 8 Solutions
FINANCIAL ACCOUNTING 9TH
Ch. 8 - Define long-lived assets. Why are they considered...Ch. 8 - Prob. 2QCh. 8 - What are the classifications of long-lived assets?...Ch. 8 - Prob. 4QCh. 8 - Describe the relationship between the expense...Ch. 8 - Prob. 6QCh. 8 - Prob. 7QCh. 8 - In computing depreciation, three values must be...Ch. 8 - The estimated useful life and residual value of a...Ch. 8 - Prob. 10Q
Ch. 8 - Prob. 11QCh. 8 - Prob. 12QCh. 8 - Prob. 13QCh. 8 - Prob. 14QCh. 8 - Prob. 15QCh. 8 - Why is depreciation expense added to net income...Ch. 8 - Miga Company and Porter Company both bought a new...Ch. 8 - Leslie, Inc.. followed the practice of...Ch. 8 - Prob. 3MCQCh. 8 - Prob. 4MCQCh. 8 - Prob. 5MCQCh. 8 - Prob. 6MCQCh. 8 - Prob. 7MCQCh. 8 - Prob. 8MCQCh. 8 - Prob. 9MCQCh. 8 - (Chapter Supplement) Irish Industries purchased a...Ch. 8 - Prob. 8.1MECh. 8 - Prob. 8.2MECh. 8 - Prob. 8.3MECh. 8 - Prob. 8.4MECh. 8 - Computing Book Value (Double-Declining-Balance...Ch. 8 - Computing Book Value (Units-of-Production...Ch. 8 - Identifying Asset Impairment LO8-4 For each of the...Ch. 8 - Prob. 8.8MECh. 8 - Prob. 8.9MECh. 8 - Prob. 8.10MECh. 8 - Prob. 8.1ECh. 8 - Prob. 8.2ECh. 8 - Computing and Recording Cost and Depreciation of...Ch. 8 - Determining Financial Statement Effects of an...Ch. 8 - Determining Financial Statement Effects of an...Ch. 8 - Recording Depreciation and Repairs (Straight-Line...Ch. 8 - Prob. 8.7ECh. 8 - Prob. 8.8ECh. 8 - Computing Depreciation under Alternative Methods...Ch. 8 - Computing Depreciation under Alternative Methods...Ch. 8 - Prob. 8.11ECh. 8 - Prob. 8.12ECh. 8 - Prob. 8.13ECh. 8 - Computing Depreciation and Book Value for Two...Ch. 8 - Prob. 8.15ECh. 8 - Recording the Disposal of an Asset at Three...Ch. 8 - Prob. 8.17ECh. 8 - Prob. 8.18ECh. 8 - Prob. 8.19ECh. 8 - Prob. 8.20ECh. 8 - Prob. 8.21ECh. 8 - Prob. 8.22ECh. 8 - (Chapter Supplement) Recording a Change in...Ch. 8 - Prob. 8.24ECh. 8 - Prob. 8.25ECh. 8 - Explaining the Nature of a Long-Lived Asset and...Ch. 8 - Analyzing the Effects of Repairs, an Addition, and...Ch. 8 - Prob. 8.3PCh. 8 - Best Buy Co., Inc., headquartered in Richfield,...Ch. 8 - Evaluating the Effect of Alternative Depreciation...Ch. 8 - Recording and Interpreting the Disposal of Three...Ch. 8 - Prob. 8.7PCh. 8 - Prob. 8.8PCh. 8 - Computing Goodwill from the Purchase of a Business...Ch. 8 - Prob. 8.10PCh. 8 - Prob. 8.11PCh. 8 - Explaining the Nature of a Long-Lived Asset and...Ch. 8 - Prob. 8.2APCh. 8 - Computing the Acquisition Cost and Recording...Ch. 8 - Prob. 8.4APCh. 8 - Recording and Interpreting the Disposal of Three...Ch. 8 - Prob. 8.6APCh. 8 - Prob. 8.7APCh. 8 - Asset Acquisition, Depreciation, and Disposal Pool...Ch. 8 - Case A. Dr Pepper Snapple Croup, Inc., is a...Ch. 8 - Prob. 8.1BCOMPCh. 8 - Prob. 8.1CCOMPCh. 8 - Case D. Stewart Company reports the following...Ch. 8 - Case E. Matson Company purchased the following on...Ch. 8 - Prob. 8.1CPCh. 8 - Finding Financial Information LO8-1, 8-2, 8-6...Ch. 8 - Comparing Companies within an Industry Refer to...Ch. 8 - Prob. 8.4CPCh. 8 - Prob. 8.5CPCh. 8 - Prob. 8.6CPCh. 8 - Evaluating the Impact of Capitalized Interest on...
Knowledge Booster
Similar questions
- Expenditures After Acquisition Listed below are several transactions: a. Paid $80 cash to replace a minor part of an air conditioning system. b. Paid $40,000 to fix structural damage to a building. c. Paid $8,000 for monthly salaries. d. Paid $12,000 to replace a manual cutting machine with a computer-controlled machine. e. Paid $1,000 related to the annual painting of a building. Required: Classify each transaction as either a revenue expenditure, a capital expenditure, or neither.arrow_forwardCost of a Fixed Asset Colson Photography Service purchased a new digital imaging machine on April 15 for $11,200. During installation Colson incurred and paid in cash the following costs: Colson also paid $160 to replace a bracket on the digital imager that was damaged when one of Colsons employees dropped a box on it while it was being installed. Required: 1. Determine the cost of the digital imaging machine. 2. CONCEPTUAL CONNECTION Explain why you included or excluded the $160 bracket replacement cost.arrow_forwardWhen depreciation is recorded each period, what account is debited? a. Depreciation Expense b. Cash c. Accumulated Depreciation d. The fixed asset account involved Use the following information for Multiple-Choice Questions 7-4 through 7-6: Cox Inc. acquired a machine for on January 1, 2019. The machine has a salvage value of $20,000 and a 5-year useful life. Cox expects the machine to run for 15,000 machine hours. The machine was actually used for 4,200 hours in 2019 and 3,450 hours in 2020.arrow_forward
- IMPACT OF IMPROVEMENTS AND REPLACEMENTS ON THE CALCULATION OF DEPRECIATION On January 1, 20-1, Dans Demolition purchased two jackhammers for 2,500 each with a salvage value of 100 each and estimated useful lives of four years. On January 1, 20-2, a stronger blade to improve performance was installed in Jackhammer A for 800 cash and the compressor was replaced in Jackhammer B for 200 cash. The compressor is expected to extend the life of Jackhammer B one year beyond the original estimate. REQUIRED 1. Using the straight-line method, prepare general journal entries for depreciation on December 31, 20-1, for Jackhammers A and B. 2. Enter the transactions for January 20-2 in a general journal. 3. Assuming no other additions, improvements, or replacements, calculate the depreciation expense for each jackhammer for 20-2 through 20-4.arrow_forwardN1arrow_forwardDepreciation Choices and Outcome.Mulligan Co. purchased a new machine on January 1. The following information pertains to the purchase: Life of asset 5 years Salvage value $9,000 Purchase price 54,000 Sales tax 3,000 Freight cost 2,400 Electrical set-up 2,100 Custom programming 1,500 Estimated annual labor savings 10,500 Additional revenue generated 24,000 a. Determine the capitalized cost of the new machine$Answerarrow_forward
- Required information Computing and Recording Cost and Depreciation of Assets (Straight- Line Depreciation) Shahia Company bought a building for $ 85,000 cash and the land on which it was located for $119, 000 cash. The company paid transfer costs of $17,000 ($7,000 for the building and $10, 000 for the land). Renovation costs on the building before it could be used were $ 27,000. E83 Part 1 Required: Prepare the journal entry to record the purchase of the property, including all relevant expenditures. Assume that all transactions were for cash and that all purchases occurred at the start of the year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. (Part 2) Compute straight-line depreciation at the end of one year, assuming an estimated 10 year useful life and a $14,000 estimated residual value. (Part 3) Required information Computing and Recording Cost and Depreciation of Assets ( Straight-Line Depreciation) Shahia…arrow_forwardRequired information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below] NewTech purchases computer equipment for $261,000 to use in operating activities for the next four years at estimates the equipment's salvage value at $30,000. Exercise 8-8 (Algo) Double-declining-balance depreciation LO P1 Prepare a table showing depreciation and book value for each of the four years assuming double-declining balance depreciation, Note: Enter all amounts as positive values. Year Year 1 Year 2 Year 3 Year 4 Total Depreciation for the Period Beginning-Year Depreciation - Book Value Rate Annual thepreciation 3 End of Period Accumulated Depreciation Year-End Book Valusarrow_forwardAcquisition Cost The following cases are independent. Case A Starling Ltd. bought a building for $1,920,000. Before using the building, the following expenditures were made: Repair and renovation of building $ 197,000 Construction of new paved driveway 30,400 Upgraded landscaping 4,500 Wiring 25,000 Deposits with utilities for connections 2,650 Sign for front and back of building, attached to roof 13,200 Installation of fence around property 18,400 Case B Lark Company purchased a $38,000 tract of land for a new manufacturing facility. Lark demolished an old building on the property and sold the materials it salvaged from the demolition. Lark incurred additional costs and realized salvage proceeds as follows: Demolition of old building $ 33,550 Routine maintenance (mowing) done on purchase 2,650 Proceeds from sale of salvaged materials 15,350 Legal fees 13,600 Title guarantee insurance 6,050 Required:1.…arrow_forward
- Problem C ABC Co. acquired a new machine. Details of the acquisition are as follows: Cash paid for machine including VAT of P60,000 Royalty payment based on units produced Cost of transporting machine Cost of installation by expert fitter Labor of testing machine Materials used and damaged as a result of testing the machine 560,000 19,000 15,000 40,000 20,000 10,000 Repair cost of new machine damaged in the process of installation 12,000 Cost of training for personnel who will use the machine 25,000 Cost of safety rails and platforms surrounding machine 50,000 70,000 Cost of water device to keep machine cool Cost of adjustment to machine to make it operate more efficiently Estimated dismantling cost to be incurred as required by contract Cost of removing old machine Loss on premature retirement – old machine Gratuity paid to operator of old machine, who was laid off 75,000 67,000 10,000 120,000 20,000 Required: Compute for the cost of the new machine.arrow_forwardPlease answer complete and properlyarrow_forwardComparison of Depreciation Methods P7. Bao Wao Designs Inc. purchased a computerized blueprint printer that will assist in the design and display of plans for factory layouts. The cost of the printer was $22,500, and its expected useful life is four years. The company can probably sell the printer for $2,500 at the end of four years. The printer is expected to last 6,000 hours. It was used 1,200 hours in year 1; 1,800 hours in year 2; 2,400 hours in year 3; and 600 hours in year 4. Required Compute the annual depreciation and carrying value for the new blueprint printer for each of the four years (round to the nearest dollar where necessary) under each of the following methods: (a) straight-line, (b) production, and (c) double-declining balance. If the printer is sold for $12,000 after year 2, what would be the gain or loss under each method? Accounting Connection ▶ What conclusions can you…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningCentury 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage