FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- On March 31, 2024, the Herzog Company purchased a factory complete with vehicles and equipment. The allocation of the total purchase price of $900,000 to the various types of assets along with estimated useful lives and residual values are as follows: Asset Land Building Equipment Vehicles Total Cost $ 150,000 400,000 200,000 150,000 $ 900,000 Estimated Residual Value N/A none 12% of cost $ 15,000 Estimated Useful Life (in years) N/A 25 On June 29, 2025, equipment included in the March 31, 2024, purchase that cost $90,000 was sold for $70,000. Herzog uses the straight-line depreciation method for building and equipment and the double-declining-balance method for vehicles. Partial-year depreciation is calculated based on the number of months an asset is in service. Required 1 Required 2 Required 3 Building Equipment Vehicles Required: 1. Compute depreciation expense on the building, equipment, and vehicles for 2024. 2. Prepare the journal entries to record the depreciation on the…arrow_forwardPlant and Equipment Your analysis of Moen Corporation's fixed asset accounts at yearend reveals the following information:1. Moen owns two tracts of land. The first, which cost $18,000, is being held as afuture building site. It has a current market value of $20,000. The second, whichcost $19,000, was purchased 10 years ago. The current office and factorybuildings are on this site. The land has a current market value of $56,000.2. Moen owns two buildings. The office building and the factory building wereboth built 10 years ago at a cost of $50,000 and $120,000, respectively. At thattime, each was expected to have a life of 30 years and a residual value of 10% oforiginal cost. They are being depreciated on a straight-line basis.3. Moen owns factory machinery with a total cost of $51,000 and accumulateddepreciation of $35,300. Included in factory machinery is one machine that cost$7,000 and has accumulated depreciation of $4,200. This machine is being heldfor resale and is not being used…arrow_forwardAt December 31, 2014, Navaro Corporation reported the following plant assets:. Land Buildings $5,289,000 $32,900,000 Less: Accumulated depreciation - buildings 21,023,775 11,876,225 Equipment 70,520,000 Less: Accumulated depreciation - equipment 8,815,000 61,705,000 Total plant assets $78,870,225 During 2015, the following selected cash transactions occurred. Apr. 1 Purchased land for $3,878,600. May 1 Sold equipment that cost $1,057,800 when purchased on January 1, 2008. The equipment was sold for $299,710. June 1 Sold land for $2,820,800. The land cost $1,763,000. July 1 Purchased equipment for $1,939,300. Dec. 31 Retired equipment that cost $1,234,100 when purchased on December 31, 2005. No salvage value was received. Record adjusting entries for depreciation for 2015 Prepare the plant assets section of Navaro's balance sheet at December 31 2015arrow_forward
- Intangibles: Balance Sheet Presentation and Income Statement Effects Clinton Company has provided information on intangible assets as follows: A patent was purchased from Lou Company for $1,680,000 on January 1, 2018. Clinton estimated the remaining useful life of the patent to be 10 years. The patent was carried in Lou's accounting records at a net book value of $1,440,000 when Lou sold it to Clinton. During 2019, a franchise was purchased from Rink Company for $500,000. In addition, 6% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $1,800,000. Clinton estimates the useful life of the franchise to be 10 years and takes a full year's amortization in the year of purchase. Clinton incurred R&D costs in 2019 as follows: Materials and equipment $125,000 Personnel 162,000 Indirect costs 78,000 $365,000 Clinton estimates that these costs will be recouped by December 31, 2020. On January 1, 2019, Clinton estimates, based on new…arrow_forwardInformation related to plant assets, extractable natural resources, and intangibles at the end of 2020 for Whispering Energy is as follows: buildings £1,020,000, accumulated depreciation-buildings £650,000, goodwill £410,000, coal mine £499,000, and accumulated depletion-coal mine £108,000. Prepare a partial statement of financial position of Whispering Energy for these items. (List Property, plant and equipment in order of coal mine and buildings.) WHISPERING ENERGY Statement of Financial Position (partial) > >arrow_forwarda Determine cost of plant acquisitions. E9.1 (LO 1), C Writing The following expenditures relating to plant assets were made by Glenn Company during the first 2 months of 2022. 1. Paid $7,000 of accrued taxes at the time the plant site was acquired. 2. Paid $200 insurance to cover a possible accident loss on new factory machinery while the machinery was in transit. 3. Paid $850 sales taxes on a new delivery truck. 4. Paid $21,000 for parking lots and driveways on the new plant site. 5. Paid $250 to have the company name and slogan painted on the new delivery truck. 6. Paid $8,000 for installation of new factory machinery. 7. Paid $900 for a 2-year accident insurance policy on the new delivery truck. 8. Paid $75 motor vehicle license fee on the new truck. Instructions a. Explain the application of the historical cost principle in determining the acquisition cost of plant assets. b. List the numbers of the transactions, and opposite each indicate the account title to which each…arrow_forward
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