Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 11.32E
To determine
To prepare:
Given Information:
Cost of machine acquired on January 1, 2010 is $260,000.
Useful life of machinery is 10 years.
Scrap value of the machinery is $20,000.
On August 1, 2015; old machine was exchanged for new machine.
Market value of new machinery is $157,250.
Cash received mounted to $27,750.
Fair value of old machine is $185,000.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Comprehensive At December 31, 2018, certain accounts included in theproperty, plant, and equipment section of Townsand Company's balancesheet had the following balances:
LandBuildingsLeasehold improvementsMachinery and equipment
$100,000800,000500,000700,000
During 2019, the following transactions occurred:
1. Land site number 621 was acquired for $1,000,000. Additionally,to acquire the land, Townsand paid a $60,000 commission to a realestate agent. Costs of $15,000 were incurred to clear the land.During the course of clearing the land, timber and gravel were recovered and sold for $5,000.2. A second tract of land (site number 622) with a building wasacquired for $300,000. The closing statement indicated that theland value was $200,000 and the building value was $100,000.Shortly after acquisition, the building was demolished at a cost of $30,000. A new building was constructed for $150,000 plus the following costs:
Excavation feesArchitectural design feesBuilding permit fee…
Assume REH AG, a hypothetical company, incurs expenditures of €1,000 per monthduring the fiscal year ended 31 December 2009 to develop software for internal use.Under IFRS, the company must treat the expenditures as an expense until the softwaremeets the criteria for recognition as an intangible asset, after which time the expenditurescan be capitalized as an intangible asset.1. What is the accounting impact of the company being able to demonstrate that thesoftware met the criteria for recognition as an intangible asset on 1 February versus1 December?2. How would the treatment of expenditures diff er if the company reported under U.S.GAAP and it had established in 2008 that the project was likely to be completed?
Help
Save
Required information
Enter your search term
E8-4 (Algo) Determining Financial Statement Effects of an Asset Acquisition and Depreciation (Straight-
Line Depreciation) LO8-2, 8-3
[The following information applies to the questions displayed below.]
During Year 1, Ashkar Company ordered a machine on January 1 at an invoice price of $23,000. On the date of delivery,
January 2, the company paid $6,000 on the machine, with the balance on credit at 9 percent interest due in six months.
On January 3, it paid $600 for freight on the machine. On January 5, Ashkar paid installation costs relating to the machine
amounting to $2,800. On July 1, the company paid the balance due on the machine plus the interest. On December 31 (the
end of the accounting period), Ashkar recorded depreciation on the machine using the straight-line method with an
estimated useful life of 10 years and an estimated residual value of $4,200.
E8-4 Part 2
2. Compute the acquisition cost of the machine.
Acquisition…
Chapter 11 Solutions
Intermediate Accounting
Ch. 11 - Stephen J. Cosgrove is the Former Vice President....Ch. 11 - Prob. 11.2QCh. 11 - Prob. 11.3QCh. 11 - Prob. 11.4QCh. 11 - Will the expense/capitalization choice impact...Ch. 11 - Prob. 11.6QCh. 11 - Prob. 11.7QCh. 11 - For a long-lived operating asset acquired by...Ch. 11 - Prob. 11.9QCh. 11 - Prob. 11.10Q
Ch. 11 - Prob. 11.11QCh. 11 - What is the maximum amount of interest to be...Ch. 11 - Prob. 11.13QCh. 11 - Prob. 11.14QCh. 11 - Prob. 11.15QCh. 11 - Do firms expense all costs incurred after the...Ch. 11 - Prob. 11.17QCh. 11 - Prob. 11.18QCh. 11 - When using the double-declining balance...Ch. 11 - Prob. 11.20QCh. 11 - Will a firm recognize a loss on the income...Ch. 11 - Prob. 11.22QCh. 11 - Prob. 11.23QCh. 11 - Prob. 11.24QCh. 11 - Prob. 11.25QCh. 11 - Differentiate between a leasehold and a leasehold...Ch. 11 - Prob. 11.27QCh. 11 - Prob. 11.28QCh. 11 - Prob. 11.29QCh. 11 - Prob. 11.30QCh. 11 - Prob. 11.31QCh. 11 - Prob. 11.32QCh. 11 - Prob. 11.33QCh. 11 - Prob. 11.34QCh. 11 - Prob. 11.35QCh. 11 - Prob. 11.36QCh. 11 - Prob. 11.37QCh. 11 - Prob. 11.38QCh. 11 - Prob. 11.39QCh. 11 - Prob. 11.40QCh. 11 - In a nonmonetary exchange does a firm record the...Ch. 11 - Prob. 11.42QCh. 11 - Prob. 11.43QCh. 11 - Prob. 11.44QCh. 11 - Prob. 11.45QCh. 11 - Prob. 11.1MCCh. 11 - On January 1, Year 1, Bluebird Inc. borrowed 10...Ch. 11 - Prob. 11.3MCCh. 11 - Prob. 11.4MCCh. 11 - Prob. 11.5MCCh. 11 - Prob. 11.6MCCh. 11 - Prob. 11.7MCCh. 11 - Prob. 11.8MCCh. 11 - Determining Acquisition Cost. Haply, Inc. incurred...Ch. 11 - Determining Acquisition Cost. Tarpley, Inc....Ch. 11 - Prob. 11.3BECh. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Prob. 11.6BECh. 11 - Prob. 11.7BECh. 11 - Prob. 11.8BECh. 11 - Depreciation, Straight-Line Method. Hermit...Ch. 11 - Prob. 11.10BECh. 11 - Prob. 11.11BECh. 11 - Prob. 11.12BECh. 11 - Prob. 11.13BECh. 11 - Derecognition Due to Abandonment. Greene Corp....Ch. 11 - Prob. 11.15BECh. 11 - Prob. 11.16BECh. 11 - Prob. 11.17BECh. 11 - Prob. 11.18BECh. 11 - Prob. 11.19BECh. 11 - Prob. 11.20BECh. 11 - Leasehold Improvements. At the beginning of its...Ch. 11 - Determining Acquisition Cost. St Charles Flooring...Ch. 11 - Prob. 11.2ECh. 11 - Prob. 11.3ECh. 11 - Acquiring an Asset with a Note Payable (Deferred...Ch. 11 - Prob. 11.5ECh. 11 - Prob. 11.6ECh. 11 - Capitalization of Interest, Specific and General...Ch. 11 - Prob. 11.8ECh. 11 - Prob. 11.9ECh. 11 - Capitalization of Interest, Specific and General...Ch. 11 - Prob. 11.11ECh. 11 - Expensing versus Capitalizing ExpendituresAnalysis...Ch. 11 - Depreciation Methods, Disposal. Kurtis Koal...Ch. 11 - Prob. 11.14ECh. 11 - Depreciation Methods, Partial-Year Depreciation....Ch. 11 - Prob. 11.16ECh. 11 - Depreciation Methods. Ace Manufacturing, Inc....Ch. 11 - Prob. 11.18ECh. 11 - Depreciation Methods, Partial-Year Depreciation,...Ch. 11 - Prob. 11.20ECh. 11 - Partial-Year Depreciation, Sale of Property,...Ch. 11 - Prob. 11.22ECh. 11 - Disclosure of Property, Plant, and Equipment. Use...Ch. 11 - Disclosure of Property, Plant, and Equipment,...Ch. 11 - Prob. 11.25ECh. 11 - Research and Development Activities. During the...Ch. 11 - Prob. 11.27ECh. 11 - Goodwill Computation, Acquisition of Intangibles,...Ch. 11 - Prob. 11.29ECh. 11 - Prob. 11.30ECh. 11 - Prob. 11.31ECh. 11 - Prob. 11.32ECh. 11 - Prob. 11.33ECh. 11 - Prob. 11.34ECh. 11 - Prob. 11.35ECh. 11 - Prob. 11.36ECh. 11 - Prob. 11.37ECh. 11 - Exchanges Lacking Commercial Substance, Cash...Ch. 11 - Prob. 11.39ECh. 11 - Prob. 11.40ECh. 11 - Prob. 11.41ECh. 11 - Prob. 11.42ECh. 11 - Note Payable Exchanged for a Plant Asset (Deferred...Ch. 11 - Prob. 11.2PCh. 11 - Prob. 11.3PCh. 11 - Depreciation Methods and Depreciation Schedules....Ch. 11 - Prob. 11.5PCh. 11 - Prob. 11.6PCh. 11 - Goodwill and Bargain Purchase Computations. The...Ch. 11 - Prob. 11.8PCh. 11 - Prob. 11.9PCh. 11 - Prob. 11.10PCh. 11 - Prob. 11.11PCh. 11 - Judgment Case 1: Property, Plant, and Equipment:...Ch. 11 - Prob. 2JCCh. 11 - Prob. 1FSCCh. 11 - Surfing the Standards Cases Surfing the Standards...Ch. 11 - Prob. 2SSCCh. 11 - Surfing the Standards Case 3: Involuntary...Ch. 11 - Prob. 4SSCCh. 11 - Prob. 5SSCCh. 11 - Prob. 1BCCCh. 11 - Prob. 2BCC
Knowledge Booster
Similar questions
- EE provided the following information regarding its Research JPB-04 included in the company’s Intangible account as of December 31, 2022: Research JPB-04 is for a research project which consists of the following charges: Salaries of research staff, P18,000 Patent acquired solely for the use in the project, P12,000 Special equipment acquired and useful for various similar research activities, P10,000 Patent acquired for use in several research projects including JPB-04, P16,000 The equipment and patents have been found to be useful for approximately four years. Both the patents and equipment were acquired at the beginning of 2022. How much should be recognized as research and development expense for the year 2022?arrow_forward! Required information E8-4 (Algo) Determining Financial Statement Effects of an Asset Acquisition and Depreciation (Straight-Line Depreciation) LO8-2, 8-3 [The following information applies to the questions displayed below.] During Year 1, Ashkar Company ordered a machine on January 1 at an invoice price of $26,000. On the date of delivery, January 2, the company paid $7,000 on the machine, with the balance on credit at 11 percent interest due in six months. On January 3, it paid $1,100 for freight on the machine. On January 5, Ashkar paid installation costs relating to the machine amounting to $2,700. On July 1, the company paid the balance due on the machine plus the interest. On December 31 (the end of the accounting period), Ashkar recorded depreciation on the machine using the straight-line method with an estimated useful life of 10 years and an estimated residual value of $4,000. E8-4 Part 3 3. Compute the depreciation expense to be reported for Year 1. Depreciation expensearrow_forwardhow How can due entries? Intangibles: Balance Sheet Presentation and Income Statement Effects Bringle Company has provided information on intangible assets as follows: A patent was purchased from Lou Company for $1,845,000 on January 1, 2018. Bringle estimated the remaining useful life of the patent to be 15 years. The patent was carried in Lou's accounting records at a net book value of $1,635,000 when Lou sold it to Bringle. During 2019, a franchise was purchased from Rink Company for $470,000. In addition, 6% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $2,000,000. Bringle estimates the useful life of the franchise to be 5 years and takes a full year's amortization in the year of purchase. Bringle incurred R&D costs in 2019 as follows: Materials and equipment $150,000 Personnel 130,000 Indirect costs 69,000 $349,000 Bringle estimates that these costs will be recouped by December 31, 2020. On January 1, 2019,…arrow_forward
- Required information [The following information applies to the questions displayed below.] Freeman Landscaping purchased a tractor at a cost of $37,000 and sold it three years later for $18,800. Freeman recorded depreciation using the straight-line method, a five-year service life, and a $2,500 residual value. Tractors are included in the Equipment account. Required: Record the sale. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) Journal entry worksheet 1 Record the sale of tractor. Note: Enter debits before credits. \table[[Transaction,General Journal,Deblt,Credit],[1,,,],[,,,],[,,,],[,,,],[,,,],[,,,]]arrow_forwardAt December 31, 2013, certain accounts included in the property, plant, and equipment section of Reagan Company’s balance sheet had the following balances. Land Buildings Leasehold improvements Equipment $230,000890,000660,000875,000 During 2014, the following transactions occurred.1. Land site number 621 was acquired for $850,000. In addition, to acquire the land Reagan paid a $51,000 commission to a real estate agent. Costs of $35,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $13,000. A second tract of land (site number 622) with a building was acquired for $420,000. The closing statement indicated that the land value was $300,000 and the building value was $120,000. Shortly after acquisition, the building was demolished at a cost of $41,000. A new building was constructed for $330,000 plus the following costs. The building was completed and occupied on September 30, 2014.3. A third tract of…arrow_forwardAt December 31, 2013, certain accounts included in the property, plant, and equipment section of Reagan Company’s balance sheet had the following balances. Land Buildings Leasehold improvements Equipment $230,000890,000660,000875,000 During 2014, the following transactions occurred.1. Land site number 621 was acquired for $850,000. In addition, to acquire the land Reagan paid a $51,000 commission to a real estate agent. Costs of $35,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $13,000. A second tract of land (site number 622) with a building was acquired for $420,000. The closing statement indicated that the land value was $300,000 and the building value was $120,000. Shortly after acquisition, the building was demolished at a cost of $41,000. A new building was constructed for $330,000 plus the following costs. Excavation fees $38,000 Architectural design fees 11,000 Building permit fees…arrow_forward
- In the light of MFRS138 Intangible Asset, briefly explain how each of the above transaction should be accounted for in the financial statements of PJM Bhd for the year ended 31 December 2017. Discuss the recognition criteria for intangible assets contained in MFRS138. (a) (b)arrow_forwardAssume REH AG, a hypothetical company, incurs expenditures of AC1,000 per month during the fiscal year ended December 31, 2019 to develop software for internal use. Under IFRS, the company must treat the expenditures as an expense until the software meets the criteria for recognition as an intangible asset, after which time the expenditures can be capitalized as an intangible asset. 1 What is the accounting impact of the company being able to demonstrate that the software met the criteria for recognition as an intangible asset on February 1 versus December 1? 2 How would the treatment of expenditures differ if the company reported under US GAAP and it had established in 2018 that the project was likely to be completed and the software used to perform the function intended?arrow_forwardCopper Explorations recently acquired the rights to mine a new site. Equipment and a truck were purchased to begin mining operations at the site. Details of the mining assets follow: Asset Mineral rights Equipment Truck View transaction list Journal entry worksheet < 2 Date of Purchase Mar. 1/23 Mar. 1/23 Mar. 1/23 Record the depreciation on the truck. Date Dec 31, 2023 Copper's year-end is December 31 and It uses the straight-line method for all mining assets including Intangibles. Required: 1. Record amortization and depreciation at December 31, 2023, on the mining assets, including the mineral rights. Note: Enter debits before credits. Record entry 3 View transaction list Date Oct 31, 2025 Clear entry Journal entry worksheet < Note: Enter debits before credits. Cost $ 62,400 General Journal Record the disposal of the truck. 244,800 95,400 Est. Residual $0 0 2. Assume the mine was closed on October 31, 2026, and the assets were scrapped. Record the disposal of the assets. General…arrow_forward
- ! Required information [The following information applies to the questions displayed below.] The following information relates to the intangible assets of Lettuce Express: a. On January 1, 2021, Lettuce Express completed the purchase of Farmers Produce, Ic., for $1,590,000 in cash. The fair value of the identifiable net assets of Farmers Produce was $1,431,000. b. Included in the assets purchased from Farmers Produce was a patent for a method of processing lettuce valued at $54,000. The original legal life of the patent was 20 years. There are still 17 years left on the patent, but Lettuce Express estimates the patent will be useful for only 10 more years. c. Lettuce Express acquired a franchise on July 1, 2021, by paying an initial franchise fee of $187,600. The contractual life of the franchise is seven years. 2. Prepare the intangible asset section of the December 31, 2021, balance sheet. LETTUCE EXPRESS Balance Sheet December 31, 2021 (Intangible Assets Section) Intangible Assets…arrow_forwardDuring 2022, Pfeiffer Co. purchased intangible assets and debited them all to "Intangible assets". 1-Jan Research and development costs $52,000 1-Jun Goodwill Indefinite Life $64,000 1-Oct Patent 7-Year Life $252,000 (a). Prepare a journal entry to reclassify them to an intangible asset account and/or expense account. (b). Prepare a journal entry to record amortization expense as of December 31, 2022.arrow_forwardOn April 1, Oriole Company purchased for $1548000 a tract of land on which a warehouse and office building was located. The following data were collected concerning the property: Current Assessed Valuation Vendor's Original Cost Land $610000 $560000 Warehouse 390000 360000 Office building 800000 684000 $1800000 $1604000 What are the appropriate amounts that Oriole should record for the land, warehouse, and office building, respectively?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning