At the beginning of 2020, your company buys a $31,200 piece of equipment that it expects to use for 4 years. The equipment has an estimated residual value of 4,000. The company expects to produce a total of 200,000 units. Actual production is as follows: 46,000 units in 2020, 53,000 units in 2021, 51,000 units in 2022, and 50,000 units in 2023. Required: Determine the depreciable cost. Calculate the depreciation expense per year under the straight-line method. Use the straight-line method to prepare a depreciation schedule. Calculate the depreciation rate per unit under the units-of-production method. Use the units-of-production method to prepare a depreciation schedule.

At the beginning of 2020, your company buys a $31,200 piece of equipment that it expects to use for 4 years. The equipment has an estimated residual value of 4,000. The company expects to produce a total of 200,000 units. Actual production is as follows: 46,000 units in 2020, 53,000 units in 2021, 51,000 units in 2022, and 50,000 units in 2023. Required: Determine the depreciable cost. Calculate the depreciation expense per year under the straight-line method. Use the straight-line method to prepare a depreciation schedule. Calculate the depreciation rate per unit under the units-of-production method. Use the units-of-production method to prepare a depreciation schedule.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....

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On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?
At the beginning of 2020, your company buys a $34,000 piece of equipment that it expects to use for 4 years. The equipment has an estimated residual value of 2,000. The company expects to produce a total of 200,000 units. Actual production is as follows: 41,000 units in 2020, 55,000 units in 2021, 54,000 units in 2022, and 50,000 units in 2023. Required: a. Determine the depreciable cost. b. Calculate the depreciation expense per year under the straight-line method. c. Use the straight-line method to prepare a depreciation schedule. d. Calculate the depreciation rate per unit under the units-of-production method. e. Use the units-of-production method to prepare a depreciation schedule. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E
At the beginning of 2020, your company buys a $30,400 piece of equipment that it expects to use for 4 years. The equipment has an estimated residual value of 6,000. The company expects to produce a total of 200,000 units. Actual production is as follows: 47,000 units in 2020, 50,000 units in 2021, 52,000 units in 2022, and 51,000 units in 2023.Required: Determine the depreciable cost. Calculate the depreciation expense per year under the straight-line method. Use the straight-line method to prepare a depreciation schedule. Calculate the depreciation rate per unit under the units-of-production method. Use the units-of-production method to prepare a depreciation schedule.
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During 2019, Latte Inc., spent P5,000,000 developing its new "Hyperion" software package. Of this amount, P2,200,000 was spent before technological feasibility was established for the product, which is to be marketed to third parties. The package was completed at December 31, 2019. Latte expects a useful life of 8 years for this product with total revenues of P16,000,000. During the first year (2020), Latte realizes revenues of P3,200,000 a. What journal entries should have been prepared by the accountant in 2019 for the foregoing facts? b. Prepare the entry to record amortization at December 31, 2020
Micropolis Technology began a new development project in 2020. The project reached technological feasibility on September 1, 2021, and was available for release to customers at the beginning of 2022. Development costs incurred prior to September 1, 2021, were $4,560,000, and costs incurred from June 30 to the product release date were $1,920,000. The 2022 revenues from the sale of the new software were $3,950,000, and the company anticipates additional revenues of $11,850,000. The economic life of the software is estimated at three years. Amortization of the software development costs for the year 2022 would be:
In 2020, Crane Contractors began construction on an office building. The building was expected to cost $46,310,000 in total, and was expected to be completed in early 2022. The customer was to pay Crane $48,760,000 for the building. Crane was able to use percentage-of-completion accounting for the project, and at the end of 2020 had accumulated $11,577,500 in cost. Crane estimated that the costs to complete the construction were in line with the original expected total costs. During 2021, there was a lumber shortage, a strike by construction workers, and various other incidents that dramatically raised costs in the construction industry. As a result, at the end of 2021, Crane estimated that the office building would cost $4,780,000 in total. To the end of 2021, Crane had spent $38,828,400 on constructing the office building. Calculate the revenue to be recognized by Crane for the 2021 fiscal year. Revenue to be recognized $ $24,867,600 Prepare the journal entry to record revenue,…
Adam’s mowing Limited purchased a group of new lawnmowers for $26,000 at 1 July 2020. As the accountant of the business, you have estimated that the mowers are to last five yearsand to have $650 residual value at that point. The entity’s business plan projects cutting 6,000 lawns over the five years, with per-year projections of 650, 1,300, 1,460, 2,140 and 550 lawns over the five years. Required: b) You are asked by the owner of the business which depreciation basis would result in the entity paying less tax at the end of the second year and so you should adopt that method for the mowers as it would save cost for the entity. Provide appropriate response to the owner’s question and request.
Adam’s mowing Limited purchased a group of new lawnmowers for $24,000 at 1 July 2020. As the accountant of the business, you have estimated that the mowers are to last five years and to have $600 residual value at that point. The entity’s business plan projects cutting 6,500 lawns over the five years, with per-year projections of 700, 1,300, 1,500, 2,200 and 800 lawns over the five years. Required: Calculate the Accumulated Depreciation balance at the end of the second year using each of the following depreciation bases. Show your working. straight-line diminishing balance (52 percent rate) units-of-production. You are asked by the owner of the business which depreciation basis would result in the entity paying less tax at the end of the second year and so you should adopt that method for the mowers as it would save cost for the entity. Provide appropriate response to the owner’s question and request. If the 52 percent reducing balance method is used, accumulated depreciation…
Adam’s mowing Limited purchased a group of new lawnmowers for $26,000 at 1 July 2020. As the accountant of the business, you have estimated that the mowers are to last five years and to have $650 residual value at that point. The entity’s business plan projects cutting 6,000 lawns over the five years, with per-year projections of 650, 1,300, 1,460, 2,140 and 550 lawns over the five years. Required: c) If the 52 per cent reducing balance method is used, accumulated depreciation will be $25,350 at the end of the fifth year. Suppose that, on the first day of the sixth year, all the lawnmowers are sold as junk for $100 cash in total. Ignoring income taxes, calculate the loss on sale that would be recorded that day.
8. On January 1, 2019, Sapphire Manufacturing Company purchased a machine for $40,000,000. The company expects to use the machine for 24,000 hours over the next six years. The estimated residual value of the machine at the end of the sixth year is $40,000. The schedule of usage of the machine is below. Year Usage 1 4,500 2 6,000 3 5,200 4 4,300 5 2,000 6 2,000 Prepare the depreciation schedule using the units-of-production method of depreciation.