P8-2 (AlgO) Analyzing the Effects of Repairs, an Addition, ana [The following information applies to the questions displayed below.] A recent annual report for Commonwealth Delivery included the following note: NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements and flight equipment modification capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquir asset. Expenditures for equipment overhaul costs of engines or airframes prior to their operational use are capita part of the cost of such assets as they are costs required to ready the asset for its intended use. Maintenance an costs are charged to expense as incurred... Assume that Commonwealth Delivery made extensive repairs on an existing building and added a new wing. Th is a garage and repair facility for delivery trucks that serve the Denver area. The existing building originally cost and by the end of last year, it was half depreciated based on use of the straight-line method, a 14-year estimated

P8-2 (AlgO) Analyzing the Effects of Repairs, an Addition, ana [The following information applies to the questions displayed below.] A recent annual report for Commonwealth Delivery included the following note: NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements and flight equipment modification capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquir asset. Expenditures for equipment overhaul costs of engines or airframes prior to their operational use are capita part of the cost of such assets as they are costs required to ready the asset for its intended use. Maintenance an costs are charged to expense as incurred... Assume that Commonwealth Delivery made extensive repairs on an existing building and added a new wing. Th is a garage and repair facility for delivery trucks that serve the Denver area. The existing building originally cost and by the end of last year, it was half depreciated based on use of the straight-line method, a 14-year estimated

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

Chapter12: Intangibles

Section: Chapter Questions

Problem 4C

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P8-2 (Algo) Analyzing the Effects of Repairs, an Addition, and Depreciation LO8-2, 8-3 [The following information applies to the questions displayed below.] A recent annual report for Commonwealth Delivery included the following note: NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements and flight equipment modifications are capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquiring the asset. Expenditures for equipment overhaul costs of engines or airframes prior to their operational use are capitalized as part of the cost of such assets as they are costs required to ready the asset for its intended use. Maintenance and repairs costs are charged to expense as incurred.. Assume that Commonwealth Delivery made extensive repairs on an existing building and added a new wing. The building is a garage and repair facility for delivery…
[The following information applies to the questions displayed below.] A recent annual report for Commonwealth Delivery included the following note: NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements and flight equipment modifications are capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquiring the asset. Expenditures for equipment overhaul costs of engines or airframes prior to their operational use are capitalized as part of the cost of such assets as they are costs required to ready the asset for its intended use. Maintenance and repairs costs are charged to expense as incurred . . . Assume that Commonwealth Delivery made extensive repairs on an existing building and added a new wing. The building is a garage and repair facility for delivery trucks that serve the Denver area. The existing building originally cost…
All of the following are true about the modified approach to infrastructure depreciation except: O If specific guidelines are met, a government can choose to expense all maintenance costs each year in lieu depreciation. The modified approach specifically excludes infrastructure assets within a network or subsystem of a netw O If specific guidelines are met, additions and improvements must be capitalized. For eligible assets, the government must establish a minimum acceptable condition level. O The government must have an asset management system in place to monitor the eligible assets. Question 18 The city operates a public swimming pool where each person is assessed a $2 entrance fee. Which statement is most appropriate to report these revenues?
C & M Securities made several expenditures during the current fiscal year, including the following:(a)For each of the items listed below, indicate whether the cost should be debited to land, buildings, equipment, land improvements, or an expense account. Amount Description of Expenditure 1. $150,000 Acquisition of a piece of land to be used as a building site No effectEquipmentBuildingExpense or Land improvementsLandExpenseExpense or BuildingsLand improvements 2. 3,000 Demolition of a small building on the land, to make way for the new building Expense or BuildingsNo effectLand improvementsBuildingExpenseEquipmentLandExpense or Land improvements 3. 7,500 Levelling of the land to prepare it for construction of the new building No effectLand improvementsExpense or Land…
E10-1 Inclusion in Property, Plant, and Equipment Guthrie Inc. must determine whether the following items are included in property, plant, and equipment: a. idle equipment awaiting sale b. machinery kept on hand and used only when other machinery breaks c. land held for investment d. the right to publish a literary work e. progress payments on a building being constructed by a contractor f. fully depreciated assets still being used g. expenditures to improve leased property h. equipment leased to others i. purchase of an asset with an expected life of 9 months j. obligation to remove leasehold improvement at the termination of a lease Required: 1. Indicate which items are included in the cost of property, plant, and equipment and which items are excluded from the cost of property, plant, and equipment. 2. Next Level For each item excluded from property, plant, and equipment, explain why it was excluded.
Under the traditional reporting method for infrastructure assets, which of the following are correct? (multiple answers are a possibility) a. new expenditures are written off over three years Ob. there does not have to be an entry to bring the original cost of the asset into the books and records of the entity c. new expenditures are immediately shown as expenses Od. new expenditures are immediately shown as expenditures e. new expenditures for the infrastructure must be capitalized and depreciated over the estimated useful life
A recent annual report for Commonwealth Delivery included the following note: NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements and flight equipment modifications are capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquiring the asset. Expenditures for equipment overhaul costs of engines or airframes prior to their operational use are capitalized as part of the cost of such assets as they are costs required to ready the asset for its intended use. Maintenance and repairs costs are charged to expense as incurred... Assume that Commonwealth Delivery made extensive repairs on an existing building and added a new wing. The building is a garage and repair facility for delivery trucks that serve the Denver area. The existing building originally cost $714,000, and by the end of last year, it was half depreciated based on use of the…
E9-13 (Algo) Calculating the Impact of Estimated Useful Lives of Intangible Assets [LO 9-6] Danube, Toggle, and ConnectOn rely on various intangible assets to operate their businesses. These companies amortize the cost of these assets using the straight-line method over the following average estimated useful lives (in years), as reported in their annual reports. es Type of Intangible Asset Developed Technology Customer Relationships Trade Names Danube Toggle ConnectOn 4.0 8.0 2.5 2.5 4.8 2.3 6.4 1.4 3.3 Assume each company spent $820,000 at the beginning of the current year for additional Developed Technology. Because of its proprietary nature, the technology is estimated to have no residual value at the end of its estimated life. Required: Calculate the impact (direction and amount) that the amortization of such expenditures would have on each company's Income from Operations in the current year. (Decreases should be indicated by a minus sign. Do not round intermediate calculations.)…
According to IAS 38 Intangible Assets, which of the following types of research and development expenditure must be written off in the year it is incurred? A Costs of designing a pre-production prototype B Legal costs in connection with registration of a patent C Costs of searching for possible alternative products D Costs of research work which are to be reimbursed by a customer
E9.24 (LO 4) (Analysis of Subsequent Expenditures) Plant assets often require expenditures subsequent to acquisition. It is important that they be accounted for properly. Any errors will affect both the balance sheets and income statements for a number of years. Instructions For each of the following items, indicate whether the expenditure should be capitalized (C) or expensed (E) in the period incurred. a. Improvement. b. Replacement of a minor broken part on a machine. C. d. e. f. 60 8 h. Expenditure that increases the useful life of an existing asset. Expenditure that increases the efficiency and effectiveness of a productive asset but does not increase its salvage value. Expenditure that increases the efficiency and effectiveness of a productive asset and increases the asset's salvage value. Expenditure that increases the quality of the output of the productive asset. Improvement to a machine that increased its fair market value and its production capacity by 30% without extending…
E8-7 (Algo) Recording Depreciation and Repairs (Straight-Line Depreciation) LO8-2, 8-3 (The following information applies to the questions displayed below) Hulme Company operates a small manufacturing facility as a supplement to its regular service activities. At the beginning of 2020, an asset account for the company showed the following balances: Hanufacturing equipnent Accumulated depreciation through 2019 $ 150, 100 48, 300 During 2020, the following expenditures were incurred for the equipment Major overhaul of the equipment on January 2, 2800, that inproved efficiency Routine malntenance and repairs on the equipnent $ 15,000 1, 00 The equipment is being depreciated on a straight-ane basis over an estimated ife of 19 years with a $19.000 estimated residual value. The annual accounting period ends on December 31 E8-7 Part 3 Required: 3. Prepare the journal entries to record the two expenditures during 2020. (f no entry is required for a transaction/event, select "No journal entry…
1. Which of the following is a qualifying asset? * A. Building that is ready for its intended use upon purchase B. An application software (intangible asset) that takes 3 years to develop C. Investment property measured at fair value D. Inventories that are routinely produced in large quantities in continuous basis 2. In which of the following instances is the capitalization of borrowing costs under PAS 23 would most likely be suspended? * A. Construction is temporarily stopped for the curing of concrete. B. Active development is stopped to give time for the engineers to reevaluate a design flaw. C. The construction of a bridge is disrupted by troubled waters. D. The construction of a building is discontinued because it is condemned by the government. The resumption of development is uncertain. 3. On January 1, 20x1, Entity A obtained a 12% ₱6,000,000 loan, specifically to finance the construction of a building. The proceeds of the…