Blossom's Drillers erects and places into service an off-shore oil platform on January 1, 2025, at a cost of $8,160,000. Blossomestimates it will cost $1,007,000 to dismantle and remove the platform at the end of its useful life in 10 years, which the company islegally required to do. (The fair value at January 1, 2025, of the dismantle and removal costs is $430,000.) Prepare the entry to recordthe asset retirement obligation. (Credit account titles are automatically indented when amount is entered. Do not indentmanually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List debit entry beforecredit entry.)Account Titles and ExplanationDebitCredit

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bright Co. received a government grant of 10,000,000 to install and run a windmill in an economically backward area. The entity had estimated that such a windmill would cost 25,000,000 to construct. The secondary condition attached to the grant is that the entity shall hire labor in the area where the windmill is located. The construction was completed on January 1, 2014. The windmill is to be depreciated using the straight-line method over a period of 10 years. What amount of grant income should be recognized for 2014? O2,500,000 1,500,000 O 1,000,000 5,000,000
On January 1, 2020, Northeast USA Transportation Company purchased a used aircraft at a cost of $64,400,000. Northeast USA expects the plane to remain useful for five years (6.000,000 miles) and to have a residual value of $6,400,000. Northeast USA expects to fly the plane 725,000 miles the first year, 1,300,000 miles each year during the second, third, and fourth years, and 1,375,000 miles the last year. Read the requirements 1. Compute Northeast USA's depreciation for the first two years on the plane using the straight-line method, the units-of-production method, and the double-declining balance method. a. Straight-line method Using the straight-line method, depreciation is for 2020 and for 2021.
On April 20, 2020, Wilhamette Incorporated purchased the right to remove timber from a 20,000-acre tract of land in Oregon over the next three years, and the company estimates no residual value. The timber is to be sold as lumber for new home construction. The cost of the timber rights was $600,000, with estimated salable timber feet of 800,000. During 2020 and 2021, Wilhamette harvested and sold 650,000 feet of timber. What is the book value of the timber rights at the end of 2021, assuming the company uses the units-of-production method?
On April 1, 2025, Sandhill Inc. entered into a cost plus fixed fee contract to construct an electric generator for Sweet Acacia Corporation. At the contract date, Sandhill estimated that it would take 2 years to complete the project at a cost of $2,060,000. The fixed fee stipulated in the contract is $468,000. Sandhill appropriately accounts for this contract under the percentage-of-completion method. During 2025, Sandhill incurred costs of $762,200 related to the project. The estimated cost at December 31, 2025, to complete the contract is $1,297,800. Sweet Acacia was billed $584,000 under the contract. Prepare a schedule to compute the amount of gross profit to be recognized by Sandhill under the contract for the year ended December 31, 2025. (If an amount reduces the account balance then enter with negative sign., e.g. -45 or parentheses e.g. (45).) SANDHILL INC. Computation of Gross Profit to be Recognized on Uncompleted Contract Year Ended December 31, 2025 Total Contract Price…
On January 1, 2020, QuickAir Transportation Company purchased a used aircraft at a cost of $64,400,000. QuickAir expects the plane to remain useful for five years (7,000,000 miles) and to have a residual value of $6,400,000. QuickAir expects to fly the plane 925,000 miles the first year, 1,225,000 miles each year during the second, third, and fourth years, and 2,400,000 miles the last year. Read the requirements. 1. Compute QuickAir's depreciation for the first two years on the plane using the straight-line method, the units-of-production method, and the double-declining balance method. a. Straight-line method Using the straight-line method, depreciation is for 2020 and for 2021.
On January 1, 2024, Ghosh Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Ghosh. • The equipment cost Ghosh $956,600 and has an expected useful life of five years. • Ghosh expects the residual value at December 31, 2027, will be $300,600. • Negotiations led to the lessee guaranteeing a $340,600 residual value. Equal payments under the finance/sales-type lease are $200,600 and are due on December 31 of each year with the first payment being made on December 31, 2024. • Karrier is aware that Ghosh used a 5% interest rate when calculating lease payments. Note: Use Excel, or a financial calculator. Required: 1. Prepare the appropriate entries for both Karrier and Ghosh on January 1, 2024, to record the lease. 2. Prepare all appropriate entries for both Karrier and Ghosh on December 31, 2024, related to the lease. Complete this question by entering your answers…
Please explain it properly
On 1/1 2019, the Al-Qadhafi Industrial Company purchased an automated packaging line at a price of $60,000, and the company paid in cash the fees for transporting a packaging line $55,000, the work costs of a special base for the line $135,000, and the costs of conducting start-up experiments at $150,000. The company estimated the shelf life of the packaging line 6 years, the scrap value $400,000 and it is depreciated according to the straight line. On December 31, 2019, it was found that the fair market value of the packaging line, minus its selling costs, equals $11,750,000, and its remaining life is 4 years, not 5 years. Required 1- Acknowledgment of the operations related to the packaging line in the books of the Food Industries Company:• Costs incurred to get the packaging line ready for use• Inventory adjustments at the end of 2019• Impairment in the value of the packaging line at the end of 2019• Inventory adjustments at the end of 2020• 2- Preparing the partial financial…
Bonita Mining Company purchased land on February 1, 2025, at a cost of $1,252,100. It estimated that a total of 57,000 tons of mineral was available for mining. After it has removed all the natural resources, the company will be required to restore the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $108,900. It believes it will be able to sell the property afterwards for $121,000. It incurred developmental costs of $242,000 before it was able to do any mining. In 2025, resources removed totaled 28,500 tons. The company sold 20,900 tons. Compute the following information for 2025. a. b. C. Per unit mineral cost Total material cost of December 31, 2025, inventory Total material cost in cost of goods sold at December 31, 2025 $ $ /ton
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $430,152 and has an expected economic life of five years. Aqua and Maywood expect the residual value at December 31, 2024, to be $66,000. Negotiations led to Maywood guaranteeing a $94,000 residual value. Equal payments under the lease are $132,000 and are due on December 31 of each year with the first payment being made on December 31, 2021. Maywood is aware that Aqua used a 7% interest rate when calculating lease payments. (FV of $1, PV of $1, FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. & 2. Prepare the appropriate entries for Maywood on January 1, 2021 and December 31, 2021, related to the lease. (If no entry is required for a transaction/event, select "No journal entry required" in the…
Vaibhav
The carrying value of building PDU on December 31, 2020 is $800,000 and had remaining useful life of 25 years. It is the company's policy to depreciate all its buildings using the straight-line method. On January 2, 2021, Emma Company committed to a plan to sell building PDU and classified this asset as held for sale. Building PDU was priced at $850,000, which is equal to its fair market value. During 2021, the market conditions that existed at the date the building was classified initially as held for sale deteriorated because of the prevailing worldwide pandemic and as a result, the asset is not sold at the end of 2021. On the same year, the company actively solicited but did not receive any reasonable offers to purchase the building and, in response, reduced the price to $840,000. The building continues to be actively marketed at a price that is reasonable given the change in market conditions. In 2022, the market conditions deteriorate further, and the building is yet to be sold…

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