Dorothea Company acquired several fixtures for its new building, including display cases, shelves and hanging racks. The invoice price of the fixtures was P700,000. The entity received a 2% cash discount by paying within the discount period. Freight and insurance during shipment totaled P3,000. Costs of assembling and installing fixtures were 5,000. While installing a display case, a new employee carelessly broke a glass top. This top was replaced at a cost of P2,000. What total amount should be recorded as cost of the fixtures?

Dorothea Company acquired several fixtures for its new building, including display cases, shelves and hanging racks. The invoice price of the fixtures was P700,000. The entity received a 2% cash discount by paying within the discount period. Freight and insurance during shipment totaled P3,000. Costs of assembling and installing fixtures were 5,000. While installing a display case, a new employee carelessly broke a glass top. This top was replaced at a cost of P2,000. What total amount should be recorded as cost of the fixtures?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter7: Losses—deductions And Limitations

Section: Chapter Questions

Problem 45P: The Goodson Company is a chain of retail electronics stores. How much of a loss can Goodson deduct...

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The Goodson Company is a chain of retail electronics stores. How much of a loss can Goodson deduct in each of the following cases? Explain. a. An employee drops a 65-inch 3D television, cracking the plastic casing on the back. The television normally sells for 3,300. The cost of the set is 2,400, and Goodson sells the damaged set for 1,500. b. The company replaces its inventory system. The old system cost 45,000 and has a basis of 16,000. The company sells the old system for 7,500. The new system costs 75,000. c. A flood damages one of Goodsons retail stores. The building suffers extensive water damage. The basis of the building is 60,000, and the cost of repairing the damage is 72,000. The insurance company reimburses Goodson 50,000. d. The owner of Goodson sells a complete home entertainment center (e.g., projection TV, DVD, stereo system) to his sister for 7,000. The usual sales price is 8,500. The system costs 6,300. e. Assume the same facts as in part d, except that the owner sells the home entertainment center to his sister for 5,500. f. The owner of Goodson finds that the controller has embezzled 10,000 from the company. Before the owner can confront the controller, the controller leaves town and cannot be found. g. Upon arriving at the companys headquarters, the vice president of sales finds that someone has broken in and stolen three computers. The damage to the outside door is extensive. The cost of repairing the door is 1,500, and the cost of replacing the three computers is 9,500. The original cost of the computers totals 10,500. Goodsons basis in the computers is 5,000. The thieves also stole 350 from the petty cash fund. Goodson files a claim with its insurance company and receives 4,800.
Blake furniture recently purchased new equipment for its plant. The list price of the equipment was $40,000.Company paid sales taxes of $2,100 at the date of purchase. Freight charges for theequipment totaled $680. Installation and training costs related to the equipment amounted to $900. During installation, one of the pieces of equipment was accidentally damaged by an employee. It cost $400 to repair this damage. Blake furniture will depreciate this equipment by the straight-line method (half-year convention) and 150% declining balance method over an estimated useful life of 4 years assuming a $3,000 scrap value.  Prepare depreciation schedules
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Grab Manufacturing Co. purchased a ten-ton draw press at a cost of $180,000. Since the company made a cash payment, a discount of $9,000 is received in the purchase. Shipping costs were $4,600, which included $200 for insurance in transit. Installation costs totaled $12,000, which included $4,000 for taking out a section of a wall and rebuilding it because the press was too large for the doorway. Insurance expenses paid for the first year is $10,000. The capitalized cost of the ten-ton draw press is:
Granite Company purchased a machine costing $121,000, terms 2/10, n/30. The machine was shipped FOB shipping point and freight charges were $2,100. The machine requires special mounting and wiring connections costing $10,100. When installing the machine, $1,600 in damages occurred. Compute the cost recorded for this machine assuming Granite paid within the discount period.
Blake furniture recently purchased new equipment for its plant. The list price of the equipment was $40,000. Company paid sales taxes of $2,100 at the date of purchase. Freight charges for the equipment totaled $680. Installation and training costs related to the equipment amounted to $900. During installation, one of the pieces of equipment was accidentally damaged It cost $400 to repair this damage. Blake furniture will depreciate this equipment by straight-line method with half-year convention over an estimated useful life of 3 years assuming a $3,000 scrap value. a. Prepare depreciation schedule. b. Give reasons for switching to straight line method in both the accelerated methods. c. Management wants to report the highest possible earnings in its financial statements, yet it also wants to minimize its taxable income reported to the tax authorities. Explain how both of these objectives can be met. d. Do you agree that depreciation is often considered as major source of funds?…
Great Harvest Bakery purchased bread ovens from New Morning Bakery. New Morning Bakery was closing its bakery business and sold its two-year-old ovens at a discount for $700,000. Great Harvest incurred and paid freight costs of $35,000, and its employees ran special electrical connections to the ovens at a cost of $5,000. Labor costs were $37,800. Unfortunately, one of the ovens was damaged during installation, and repairs cost $4,000. Great Harvest then consumed $900 of bread dough in testing the ovens. It installed safety guards on the ovens at a cost of $1,500 and placed the machines in operation. Required: 1. Prepare a schedule showing the amount at which the ovens should be recorded in Great Harvest’s Equipment account. 2. Indicate where any amounts not included in the Equipment account should be recorded.
Rizio Company purchases a machine for $14,000, terms 2/10, n/60, FOB shipping point. Rizio paid within the discount period and took the $280 discount. Transportation costs of $316 were paid by Rizio. The machine required mounting and power connections costing $968. Another $456 is paid to assemble the machine, and $40 of materials are used to get it into operation. During installation, the machine was damaged and $350 worth of repairs were made. Complete the below table to calculate the cost recorded for this machine. Amount Included in Cost of Equipment: Invoice price of machine Net purchase price Total cost to be recorded
Freebird Inc acquired a truck to transport its inventory from the port to its various stores. The truck cost $125,000; taxes and licensing fees were $12,000; a custom paint job to put the firm logo on cost $5,000. In the first week of use, an inexperienced driver shredded two of the truck's tires, necessitating replacement tires that cost $750. The truck is estimated to last 5 years or 200,000 miles. It has an expected salvage value of $10,000. In year 1, the truck is estimated to be driven 40,000 miles; in years 2 and 3 the truck's mileage is estimated to be 50,000 per year, and 30,000 per year for years 4 and 5. Required: Find the depreciation expense, A/D, and book value after two years, using 3 different methods: straight-line, units of production, double-declining balance.
Anchor Company purchased a manufacturing machine with a list price of $88,000 and received a 2% cash discount on the purchase. The machine was delivered under terms free on board (FOB) shipping point, and transportation costs amounted to $2,800. Anchor paid $3,900 to have the machine installed and tested. Insurance costs to protect the asset from fire and theft amounted to $5,000 for the first year of operations. What is the cost of the machine? Multiple Choice O O O O $92,940 $97,940 $89,040 $86,240