Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter 9, Problem 5DQ
To determine
State whether the motor installation in the acquired truck is a capital expenditure or revenue expenditure.
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Which of the following would be considered capital expenditures (debit to an asset)?
Sales tax on the purchase of equipment
Purchase of cleaning supplies to clean the company's microwave
A special concrete foundation that was poured specifically for a new piece of equipment
Installation costs for installing a new piece of equipment
General maintenance costs for a piece of equipment that has been in service for ten years
Routine oil change for a van
Repair of damage incurred on a new piece of equipment while the new equipment was being brought into the company's office
Attorney's fees incurred to review the purchase agreement for a new piece of equipment
Installation of a parking lot around a retail buildling
Freight costs for the delivery of a purchased used printing press
Identify the following expenditures as capital expenditures or revenue expenditures.
Immediately after acquiring a new delivery truck, paid$260 to have the name of the store and other advertising material painted on the vehicle.
Painted delivery truck at a cost of $450 after two years of use.
Purchased new battery at a c cost of $40 for two years old delivery truck
Identify which of the following expenditures is considered as a capital expenditure that must be capitalized (depreciated):(a) Purchase land to build a warehouse at $300,000.(b) Purchased a copy machine at $15,000.(c) Installed a conveyor system at a cost of $55,000 to automate some part of production processes.(d) Painted the office building, both interior and exterior, at a cost of $22,000.( e) Repaved the parking lot at a cost of $25,000.(f) Installed a purified water fountain in the employee lounge at a cost of$3,000.(g) Purchased a spare part for a stamping machine at a cost of $3,800.(h) Paid $12,000 to lease a dump truck for six months.(i) Purchased a patent on an energy-saving device over five years at a cost of $30,000.
Chapter 9 Solutions
Financial And Managerial Accounting
Ch. 9 - ONeil Office Supplies has a fleet of automobiles...Ch. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Prob. 4DQCh. 9 - Prob. 5DQCh. 9 - Keyser Company purchased a machine that has a...Ch. 9 - Prob. 7DQCh. 9 - A. Under what conditions is the use of an...Ch. 9 - Prob. 9DQCh. 9 - Prob. 10DQ
Ch. 9 - Straight-line depreciation A building acquired at...Ch. 9 - Units-of-activity depreciation A truck acquired at...Ch. 9 - Double-declining-balance depreciation A building...Ch. 9 - Revision of depreciation Equipment with a cost of...Ch. 9 - Capital and revenue expenditures On February 14,...Ch. 9 - Sale of equipment Equipment was acquired at the...Ch. 9 - Prob. 7BECh. 9 - Prob. 8BECh. 9 - Fixed asset turnover ratio Select financial...Ch. 9 - Costs of acquiring fixed assets Melinda Stoffers...Ch. 9 - Prob. 2ECh. 9 - Prob. 3ECh. 9 - Nature of depreciation Tri-City Ironworks Co....Ch. 9 - Straight-line depreciation rates Convert each of...Ch. 9 - Straight-line depreciation A refrigerator used by...Ch. 9 - Depreciation by units-of-activity method A...Ch. 9 - Depreciation by units-of-activity method Prior to...Ch. 9 - Depreciation by two methods A Kubota tractor...Ch. 9 - Depreciation by two methods A storage tank...Ch. 9 - Partial-year depreciation Equipment acquired at a...Ch. 9 - Revision of depreciation A building with a cost of...Ch. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Capital expenditure and depreciation Willow Creek...Ch. 9 - Entries for sale of fixed asset Equipment acquired...Ch. 9 - Disposal of fixed asset Equipment acquired on...Ch. 9 - Prob. 19ECh. 9 - Kleen Company acquired patent rights on January 10...Ch. 9 - Prob. 21ECh. 9 - Prob. 22ECh. 9 - Asset traded for similar asset A printing press...Ch. 9 - Prob. 24ECh. 9 - Prob. 25ECh. 9 - Prob. 26ECh. 9 - Prob. 1PACh. 9 - Comparing three depreciation methods Dexter...Ch. 9 - Depreciation by three methods; partial years...Ch. 9 - Depreciation by two methods; sale of fixed asset...Ch. 9 - Transactions for fixed assets, including sale The...Ch. 9 - Prob. 6PACh. 9 - Prob. 1PBCh. 9 - Comparing three depreciation methods Waylander...Ch. 9 - Depreciation by three methods; partial years...Ch. 9 - Depreciation by two methods; sale of fixed asset...Ch. 9 - Transactions for fixed assets, including sale The...Ch. 9 - Prob. 6PBCh. 9 - Compare Amazon.com to Netflix Amazon.com, Inc....Ch. 9 - Prob. 2MADCh. 9 - Prob. 3MADCh. 9 - Compare Fed Ex and UPS FedEx Corporation (FDX) and...Ch. 9 - Prob. 5MADCh. 9 - Revising depreciation estimates Hard Bodies Co. is...Ch. 9 - Communication Godwin Co. owns three delivery...Ch. 9 - Prob. 4TIF
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- Addition of a sprinkler system to the manufactoring facility to reduce the risk of fire damage, $36,700 would be an expense in the period occured or would be capitalized and depreciated over the useful life of the asset?arrow_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
- A company purchased a track of land with the intent to use the land to put a new building. However, an old building is sitting where the new building is to be constructed, and the old building must be removed at a cost of $10,000. Should the cost of removing the old building be part of the cost of the building or be part of the cost of the land? Please explain:arrow_forwardIndigo Architecture made the following cash expenditures during its first year in operations: 1. 2. 3. 4. 5. 6. 7. 8. 9. (a1) Cost of real estate purchased as a plant site (land and building) Accrued property taxes paid at the time of the purchase of the real estate Cost of demolishing building to make land suitable for construction of a new building Architect's fees on building plans Excavation costs for new building Cost of filling and grading the land Full payment to building contractor Cost of parking lots and driveways Property taxes paid for the current year on the land Your answer is partially correct. $133,900 3,300 10,600 14,700 26,900 2.300 752,600 32,800 8,200 Record the above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)arrow_forwardFor each of the following items, indicate if it is a Capital Expenditures (CE) or Revenue Expenditure (RE). 1. Constructed an addition to an existing building. 2. Repainted the president’s office. 3. Paid cash for improvements that will increase the number of products that the machine can produce per hour. 4. Replaced the tires on a company delivery vehicle. 5. Replaced a component of a machine that will increase the economic life of that machine.arrow_forward
- Indicate which of the following costs should be expensed when incurred. a. $13,000 paid to rearrange and reinstall machinery. b. $200,000 paid for addition to building. c. $200 paid for tune-up and oil change on delivery truck. d. $7,000 paid to replace a wooden floor with a concrete floor. e. $2,000 paid for a major overhaul on a truck, which extends the useful life.arrow_forwardYour company has purchased a large new trucktractor for over-the-road use (asset class 00.26). It has a cost basis of $173,000. With additional options costing $14,000, the cost basis for depreciation purposes is $187,000. Its MV at the end of four years is estimated as $42,000. Assume it will be depreciated under the GDS: a. What is the cumulative depreciation through the end of year two? b. What is the MACRS depreciation in the third year? c. What is the BV at the end of year one?arrow_forward1. Classify the following as either a revenue expenditure (RE) or a capital expenditure (CE). a. Paid $40,000 cash to replace a motor on equipment that extends its useful life by four years. b. Paid $200 cash per truck for the cost of their annual tune-ups. c. Paid $175 for the monthly cost of replacement filters on an air-conditioning system. d. Completed an addition to a building for $225,000 cash. 2. Prepare the journal entries to record the four transactions from part 1.arrow_forward
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