During 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?
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During 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?
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- During 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?Western Wholesale Foods incurs the following expenditures during the current fiscal year. How should Western account for each of these expenditures? Capitalize and depreciate over the useful life of the asset. OR Expense in the period incurred. 1. Salaries for the repair technicians, $154,000 2. Remodeling of the executive offices, $84,700 3. Annual maintenance costs related to its machinery, $70,400 4. Improvement of the production line resulting in an increase in productivity, $33,800 5. Addition of a sprinkler system to the manufacturing facility to reduce the risk of fire damage, $37,900During the year just ended, Morton Company made the following expenditures relating to its plant building: Continuing and frequent repairs P1,600,000 Repainted the plant building 400,000 Major improvements to the electrical wiring system 1,280,000 Partial replacement of roof tiles 560,000 How much should be charged to repair and maintenance expense during the year just ended?
- During 2006, Fox company made the following expenditures relating to plant machinery and equipment. Renovation of a group of machines at a cost of $50,000 to secure greater efficiency in production over their remaining 5- year useful lives. The project was completed on December 31, 2006. Continuing, frequent, and low cost repairs at a cost of $35,000. A broken gear on a machine was replaced at a cost of $5,000. What total amount should be charged to repairs and maintenance in 2006? A. $35,000 B. $40,000 C. $85,000 D. $90,000Betterment versus Maintenance Expenditures During the year, Graham International made the following expenditures relating to plant, machinery, and equipment: Completed regularly scheduled repairs at a cost of $300,000. Overhauled several stamping machines at a cost of $550,000 to improve production efficiency. Replaced a broken cooling pump on a 100-ton press at a cost of $30,000. Required Identify which expenditures should be expensed as a maintenance expense or capitalized as a betterment outlay. Total amount charged as maintenance expense for the year: $Answer Total amount charged as betterment outlays for the year: $AnswerThe Flint Clinic purchased a new surgical laser for $81,000. The estimated salvage value is $5,100. The laser has a useful life of five years and the clinic expects to use it 11,500 hours. It was used 1,900 hours in year 1; 2,500 hours in year 2; 2,700 hours in year 3; 2,100 hours in year 4; 2,300 hours in year 5. (a) Compute the annual depreciation for each of the five years under straight-line and units-of-activity methods. Straight-line Units-of-Activity Year 1 Year 2 Year 3 Year 4 Year 5 Total $4 %24
- The Hartley Clinic purchased a new surgical laser for $90,000. The estimated salvage value is $5,000. The laser has a useful life of five years and the clinic expects to use it 10,000 hours. It was used 1,600 hours in year 1; 2,200 hours in year 2; 2,400 hours in year 3; 1,800 hours in year 4; 2,000 hours in year 5. Compute the annual depreciation for each of the five years under straight-line and units-of-activity methods. Straight-line Units-of-Activity Year 1 $enter a dollar amount $enter a dollar amount Year 2 enter a dollar amount enter a dollar amount Year 3 enter a dollar amount enter a dollar amount Year 4 enter a dollar amount enter a dollar amount Year 5 enter a dollar amount enter a dollar amount Total $enter a total amount $enter a total amount ^^^ Use this format.On November 15, 2021, Trade Company made payments for the following expenditures: Replacement parts for overhaul of machine 550,000 Labor and overhead in connection with overhaul 140,000 Continuing, frequent and low cost repairs 150,000 Replacement of broken gear of machine 50,000 The overhaul resulted in a significant increase in production. Prepare the journal entry to record the expenditure to be capitalized:Padre, Inc., purchased a used piece of heavy equipment for $25,000. Delivery of the equipmentto Padre’s business site cost $750. Expenditures to recondition the equipment and prepare it foruse totaled $2,230. The maintenance for the first year Padre owned the equipment was $1,200.Determine the cost that is the basis for calculating annual depreciation on the equipment.
- On September 10, 2018, Harry Co. incurred the following costs for one of its printing presses:Purchase of attachment $65,000Installation of attachment 5,000Replacement parts for renovation of press 18,000Labor and overhead in connection with renovation of press 7,000Neither the attachment nor the renovation increased the estimated useful life of the press. However, the renovation resulted in significantly increased productivity. What amount of the costs should be capitalized?a. $0.b. $77,000.c. $88,000.d. $95,000.During the current fiscal year, Heinrich Corp. incurred the following costs related to property, plant, and equipment: Amount paid to the contractor for the building constructed P13,000,000 Building permit fee 120,000 Excavation cost 110,000 Architect fee 440,000 Interest that would have been earned had the money used during the period of construction been invested in the money market 330,000 Invoice cost of machine acquired, terms 3/10, n/30 6,500,000 Freight, unloading and delivery charges for machine acquired 100,000 Custom duties and other charges 270,000 Allowance and hotel accommodation, paid to foreign technicians during installation and test run of machine 520,000 Royalty payment on machines purchased (based on units produced and sold) 240,000 Cash paid for the purchase of land (none was allocated to old building) 10,000,000 Mortgage assumed on the land purchased 2,100,000 Realtor’s commission 650,000 Legal fees, realty taxes and documentation expenses 900,000 Amount…Belltone Company made the following expenditures related to its 10-year-old manufacturing facility: 1. The heating system was replaced at a cost of $250,000. The cost of the old system was not known. The company accounts for improvements as reductions of accumulated depreciation. 2. A new wing was added at a cost of $750,000. The new wing substantially increases the productive capacity of the plant. 3. Annual building maintenance was performed at a cost of $14,000. 4. All of the equipment on the assembly line in the plant was rearranged at a cost of $50,000. The rearrangement clearly increases the productive capacity of the plant. Required: Prepare journal entries to record each of the above expenditures.