Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 53BP
1.
To determine
Identify the proper account for each of the costs listed and also to calculate the total cost of each asset.
2.
To determine
Record the partial-year depreciation for the year ended December 31.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
. (Learning Objectives 1, 3, 4: Measure and account for the cost of plant assets anddepreciation; analyze and record a plant asset disposal) Blair, Inc., has the following plantasset accounts: Land, Buildings, and Equipment, with a separate accumulated depreciationaccount for each of these except Land. Blair completed the following transactions:Jan 3 Traded in equipment with accumulated depreciation of $63,000 (cost of$130,000) for similar new equipment with a cash cost of $171,000. Receiveda trade-in allowance of $71,000 on the old equipment and paid $100,000in cash.Jun 30 Sold a building that had a cost of $635,000 and had accumulated depreciationof $170,000 through December 31 of the preceding year. Depreciationis computed on a straight-line basis. The building has a 40-year useful lifeand a residual value of $295,000. Blair received $135,000 cash and a$325,750 note receivable.Oct 31 Purchased land and a building for a single price of $340,000 cash. An independent appraisal valued…
(Learning Objectives 1, 4: Allocate costs to assets acquired in a lump-sumpurchase; dispose of a plant asset) Sugar Ridge Manufacturing bought three used machines ina $167,000 lump-sum purchase. An independent appraiser valued the machines as shown:Machine No. Appraised Value123$ 38,25073,10058,650What is each machine’s individual cost? Immediately after making this purchase, Sugar Ridgesold Machine No. 3 for its appraised value. What is the result of the sale? (Round decimals to threeplaces when calculating proportions, and use your computed percentages in all calculations.)
(Learning Objectives 3, 4: Measure DDB depreciation; analyze the effect of a saleof a plant asset) On January 2, 2018, Drake Furnishings purchased display shelving for $8,100cash, expecting the shelving to remain in service for five years. Drake depreciated the shelvingon a double-declining-balance basis, with $1,300 estimated residual value. On September 30,2019, the company sold the shelving for $2,400 cash. Record both the depreciation expense onthe shelving for 2019 and its sale in September. Also show how to compute the gain or loss onthe disposal of the shelving
Chapter 8 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - What is depreciation, and why is it used in...Ch. 8 - Prob. 5DQCh. 8 - Which depreciation method would be moot...Ch. 8 - Prob. 7DQCh. 8 - Prob. 8DQCh. 8 - Prob. 9DQCh. 8 - Prob. 10DQ
Ch. 8 - Prob. 1SCCh. 8 - Prob. 2SCCh. 8 - How should a capital expenditure for a long-term...Ch. 8 - Which depreciation method usually produces the...Ch. 8 - Prob. 5SCCh. 8 - Prob. 6SCCh. 8 - Prob. 7SCCh. 8 - Prob. 8SCCh. 8 - Prob. 9SCCh. 8 - Prob. 10SCCh. 8 - Prob. 11SCCh. 8 - Prob. 12SCCh. 8 - Prob. 1SECh. 8 - Long-term asset terms (Learning Objective 1) 5-10...Ch. 8 - Prob. 3SECh. 8 - Lump-sum purchase (Learning Objective 2) 5-10 min....Ch. 8 - Errors in accounting for long-term assets...Ch. 8 - Concept of depreciation (Learning Objective 3)...Ch. 8 - Depreciation methods (Learning Objective 3) 10-15...Ch. 8 - Depreciation methods (Learning Objective 3) 10-15...Ch. 8 - Prob. 9SECh. 8 - Prob. 10SECh. 8 - Prob. 11SECh. 8 - Prob. 12SECh. 8 - Prob. 13SECh. 8 - Prob. 14SECh. 8 - Prob. 15SECh. 8 - Other long term assets (Learning Objective 8) 5-10...Ch. 8 - Prob. 17SECh. 8 - Prob. 18AECh. 8 - Prob. 19AECh. 8 - Prob. 20AECh. 8 - Prob. 21AECh. 8 - Depreciation methods (Learning Objective 3) 15-20...Ch. 8 - Prob. 23AECh. 8 - Prob. 24AECh. 8 - Prob. 25AECh. 8 - Prob. 26AECh. 8 - Prob. 27AECh. 8 - Prob. 28AECh. 8 - Prob. 29AECh. 8 - Prob. 30AECh. 8 - Prob. 31AECh. 8 - Prob. 32BECh. 8 - Prob. 33BECh. 8 - Prob. 34BECh. 8 - Prob. 35BECh. 8 - Prob. 36BECh. 8 - Prob. 37BECh. 8 - Prob. 38BECh. 8 - Prob. 39BECh. 8 - Prob. 40BECh. 8 - Prob. 41BECh. 8 - Prob. 42BECh. 8 - Prob. 43BECh. 8 - Prob. 44BECh. 8 - Prob. 45BECh. 8 - Long-term asset costs and partial-year...Ch. 8 - Journalizing long-term asset transactions...Ch. 8 - Prob. 48APCh. 8 - Prob. 49APCh. 8 - Prob. 50APCh. 8 - Prob. 51APCh. 8 - Prob. 52APCh. 8 - Prob. 53BPCh. 8 - Journalizing long-term asset transactions...Ch. 8 - Prob. 55BPCh. 8 - Prob. 56BPCh. 8 - Prob. 57BPCh. 8 - Prob. 58BPCh. 8 - Prob. 59BPCh. 8 - Prob. 1CECh. 8 - Prob. 1CPCh. 8 - Continuing Financial Statement Analysis Problem...Ch. 8 - Prob. 1EIACh. 8 - Prob. 2EIACh. 8 - Financial Analysis Purpose: To help familiarize...Ch. 8 - Prob. 1IACh. 8 - Prob. 1SBACh. 8 - Written Communication A client of yours notified...
Knowledge Booster
Similar questions
- (Learning Objectives 3, 4: Measure DDB depreciation; analyze the effect of a saleof a plant asset) On January 2, 2018, Ellet Furniture purchased display shelving for $8,900cash, expecting the shelving to remain in service for five years. Ellet depreciated the shelvingon a double-declining-balance basis, with $1,100 estimated residual value. On August 31, 2019,the company sold the shelving for $2,800 cash. Record both the depreciation expense on theshelving for 2019 and its sale in August. Also show how to compute the gain or loss on thedisposal of the shelving.arrow_forward(Learning Objective 3: Compute depreciation using double-declining-balance methodwith a residual value of zero) Using the double-declining-balance method of depreciation,calculate the following amounts for the car for each of the four years of its expected life:a. Depreciation expenseb. Accumulated depreciation balancec. Book valueThe following data should be used for S7-10 through S7-12.FlavorRite purchased a used van for use in its business on January 1, 2017. It paid $17,000for the van. FlavorRite expects the van to have a useful life of four years, with an estimatedresidual value of $1,400. FlavorRite expects to drive the van 16,000 miles during 2017, 19,000miles during 2018, 17,000 miles in 2019, and 48,000 miles in 2020, for total expected miles of100,000.arrow_forward(Learning Objective 3: Determine depreciation amounts by three methods) LimaPizza bought a used Toyota delivery van on January 2, 2018, for $18,600. The van wasexpected to remain in service for four years (57,000 miles). At the end of its useful life, Limamanagement estimated that the van’s residual value would be $1,500. The van traveled 20,500miles the first year, 16,000 miles the second year, 15,400 miles the third year, and 5,100 milesin the fourth year.Requirements1. Prepare a schedule of depreciation expense per year for the van under the three depreciationmethods discussed in this chapter. (For units-of-production and double-declining-balancemethods, round to the nearest two decimal places after each step of the calculation.)2. Which method best tracks the wear and tear on the van?3. Which method would Lima prefer to use for income tax purposes? Explain your reasoningin detail.arrow_forward
- (Learning Objective 2: Distinguish capital expenditures from expenses) AssumeByron Athletic Products, Inc., purchased conveyor-belt machinery. Classify each ofthe following expenditures as a capital expenditure or an immediate expense related tomachinery:a. Purchase priceb. Installation of conveyor-belt machineryc. Special reinforcement to the machinery platformd. Ordinary repairs to keep the machinery in good working ordere. Lubrication of the machinery before it is placed in servicef. Sales tax paid on the purchase priceg. Major overhaul to extend the machinery’s useful life by four yearsh. Training of personnel for initial operation of the machineryi. Income tax paid on income earned from the sale of products manufactured by themachineryj. Periodic lubrication after the machinery is placed in servicek. Transportation and insurance while machinery is in transit from seller to buyerarrow_forward(Learning Objectives 1, 2, 3: Measure and account for plant assets; distinguish acapital expenditure from an expense; measure and record depreciation) Becker Supply, Inc.,opened an office in White Bear Lake, Minnesota. Becker incurred the following costs in acquiring land, making land improvements, and constructing and furnishing the new sales building:LO 1, 2, 3a. Purchase price of land, including an old building that will be usedfor a garage (land market value is $310,000; building marketvalue is $90,000)..................................................................................... $340,000b. Grading (leveling) land............................................................................ 8,800c. Fence around the land............................................................................. 31,400d. Attorney fee for title search on the land .................................................. 1,100e. Delinquent real estate taxes on the land to be paid by Becker Supply......…arrow_forward(Learning Objective 8: Report cash flows for plant assets) Assume AlfonsoCorporation completed the following transactions:a. Sold a store building for $670,000. The building had cost Alfonso $1,600,000, and at thetime of the sale, its accumulated depreciation totaled $930,000.b. Lost a store building in a fire. The building cost $300,000 and had accumulateddepreciation of $220,000. The insurance proceeds received by Alfonso totaled $200,000.c. Renovated a store at a cost of $140,000 (cash).d. Purchased store fixtures for $110,000 (cash). The fixtures are expected to remain inservice for ten years and then be sold for $110,000. Alfonso uses the straight-linedepreciation method.For each transaction, show what Alfonso would report for investing activities on its statement ofcash flows. Show negative amounts in parentheses.arrow_forward
- E10-19 Distinguishing capital expenditures from revenue expenditures Learning Objective 1 Consider the following expenditures: a. Purchase price. b. Ordinary recurring repairs to keep the machinery in good working order. c. Lubrication before machinery is placed in service. d. Periodic lubrication after machinery is placed in service. e. Major overhaul to extend useful life by three years. f. Sales tax paid on the purchase price. g. Transportation and insurance while machinery is in transit from seller to buyer. h. Installation. i. Training of personnel for initial operation of the machinery. Classify each of the expenditures as a capital expenditure or a revenue expenditure related to machinery.arrow_forwardthe company paid $750,000 to buy a collection of asset. the asset had the following appraised values: Equipment........................$250,000 Building............................$425,000 Land...................................$125,000 Compute the cost to be alocated to each assetarrow_forwardE10-18 Making a lump-sum puurchase of assets Learning Objective 1 Lot 3 S108,750 Dearwood Properties bought three lots in a subdivision for a lump-sum price. An independent appraiser valued the lots as follows: Lot Appraised Value 1 $ 45,000 2 292,500 3 112,500 Dearwood paid $435,000 in cash. Record the purchase in the journal, identifying each lot's cost in a separate Land account. Round decimals to two places, and use the computed percentages throughout.arrow_forward
- CengageNOWv2 | Online teaching and learning resource from Cengage Learning Calculator Sale of Equipment Equipment was acquired at the beginning of the year at a cost of $612,500. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $44,360. a. What was the depreciation for the first year? Round your answer to the nearest cent. b. Using the rounded amount from Part a in your computation, determine the gain(loss) on the sale of the equipment, assuming it was sold at the end of year eight for $102,987. Round your answer to the nearest cent and enter as a positive amount. c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent. Previous Next> Email Instructor Submit Test for Grading All work saved.arrow_forwardE9-20 Computing depreciation-three methods Learning Objective 2 1. Double-declining-balance, 12/31/19, Exp. $8,250 Crispy Fried Chicken bought equipment on January 2, 2018, for $33,000. The equipment was expected to remain in service for four years and to operate for 6,750 hours. At the end of the equipment's useful life, Crispy's estimates that its residual value will be $6,000. The equipment operated for 675 hours the first year, 2,025 hours the second year, 2,700 hours the third year, and 1,350 hours the fourth year. Requirements 1. Prepare a schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciation methods: straight-line, units-of-production, and double-declining-balance. Show your computations. Note: Three depreciation schedules must be prepared. 2. Which method tracks the wear and tear on the equipment most closely?arrow_forwardA $48,000 asset was purchased and classified as a Class 10 asset for CCA purposes. If the CCA rate is 30%, calculate UCC for the end of year 3. Select one: a. $15,800 b. $18,300 c. $19,992 d. $17,400 e. $16,660 ???arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education