Sellers Construction Company purchased a compressor for $107,700 cash. It had an estimated useful life of four years and a $11,900 salvage value. At the beginning of the third year of use, the company spent an additional $9,080 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model: Balance Sheet Cash + 13,320+ Assets Book Value of Compressor 59,800 Stockholders Equity Conmon Stock + Earnings 25,100 + 48,020 Income Statement Retained Statement of Revenue NA Expense Net Income Cash Flows NA NA NA Required Record the $9,080 expenditure in the statements model under each of the following independent assumptions: Note: In the Statement of Cash Flows column, use the initials "OA" for operating activities, "FA" for financing activities, and "IA" for investing activity. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input. a. The expenditure was for routine maintenance. b. The expenditure extended the compressor's life. c. The expenditure improved the compressor's operating capacity Sellers Construction Company b. C Horizontal Statements Model Balance Sheet Income Statement Assets Stockholders' Equity Statement of Cash Cashi · Book Value of Compressor Common Stock Retained Earnings Revenue Expenses Net Income Flows 13.320+ 59,800 25,100+ 48,020 . " + +
Sellers Construction Company purchased a compressor for $107,700 cash. It had an estimated useful life of four years and a $11,900 salvage value. At the beginning of the third year of use, the company spent an additional $9,080 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model: Balance Sheet Cash + 13,320+ Assets Book Value of Compressor 59,800 Stockholders Equity Conmon Stock + Earnings 25,100 + 48,020 Income Statement Retained Statement of Revenue NA Expense Net Income Cash Flows NA NA NA Required Record the $9,080 expenditure in the statements model under each of the following independent assumptions: Note: In the Statement of Cash Flows column, use the initials "OA" for operating activities, "FA" for financing activities, and "IA" for investing activity. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input. a. The expenditure was for routine maintenance. b. The expenditure extended the compressor's life. c. The expenditure improved the compressor's operating capacity Sellers Construction Company b. C Horizontal Statements Model Balance Sheet Income Statement Assets Stockholders' Equity Statement of Cash Cashi · Book Value of Compressor Common Stock Retained Earnings Revenue Expenses Net Income Flows 13.320+ 59,800 25,100+ 48,020 . " + +
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter14: Statement Of Cash Flows
Section: Chapter Questions
Problem 37E: During 20X1, Craig Company had the following transactions: a. Purchased 300,000 of 10-year bonds...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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