Financial Accounting
9th Edition
ISBN: 9781259222139
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 8, Problem 8.2P
Analyzing the Effects of Repairs, an Addition, and Depreciation (AP8-2)
LO8-2, 8-3 A recent annual report for FedEx 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 FedEx 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 $950,000, and by the end of last year, it was half
- 1. Ordinary repairs and maintenance expenditures for the year. $7,000 cash.
- 2. Extensive and major repairs to the roof of the building. $ 122.000 cash. These repairs were completed at the end of the current year.
- 3. The new wing was completed on December 31 of the current year at a cash cost of $230,000.
Required:
1. Applying the policies of FedEx, complete the following, indicating the effects for the preceding expenditures for the current year. If there is no effect on an account, write NE on the line.
| Building | Depreciation Expense | Repairs Expense | Cash | ||
| Balance January 1 | $950,000 | $475,000 | |||
| Depreciation | ____ | ____ | ____ | ||
| Balance prior to expenditures | 950,000 | ____ | ____ | ||
| Expenditure (a) | ____ | ____ | ____ | ____ | ____ |
| Expenditure (b) | ____ | ____ | ____ | ____ | ____ |
| Expenditure (c) | ____ | ____ | ____ | ____ | ____ |
| Balance December 31 | ____ | ____ | ____ | ____ |
2. What was the net book value of the building on December 31 of the current year?
3. Explain the effect of depreciation on
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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…
Conceptual Question
Identify whether or not each of the following items should be capitalized as intangible
assets from the following list. Explain your reason with relevant accounting standard.
Capitalised
Not capitalized
Employment costs of staff conducting
research activiities
Cost of constructing a working model of
a new product
License purchased to permit production
and sale of a product for ten years
Subject - account
Please help me.
Thankyou.
Chapter 8 Solutions
Financial Accounting
Ch. 8 - Define long-lived assets. Why are they considered...Ch. 8 - Prob. 2QCh. 8 - What are the classifications of long-lived assets?...Ch. 8 - Prob. 4QCh. 8 - Describe the relationship between the expense...Ch. 8 - Prob. 6QCh. 8 - Prob. 7QCh. 8 - In computing depreciation, three values must be...Ch. 8 - The estimated useful life and residual value of a...Ch. 8 - Prob. 10Q
Ch. 8 - Prob. 11QCh. 8 - Prob. 12QCh. 8 - Prob. 13QCh. 8 - Prob. 14QCh. 8 - Prob. 15QCh. 8 - Why is depreciation expense added to net income...Ch. 8 - Miga Company and Porter Company both bought a new...Ch. 8 - Leslie, Inc.. followed the practice of...Ch. 8 - Prob. 3MCQCh. 8 - Prob. 4MCQCh. 8 - Prob. 5MCQCh. 8 - Prob. 6MCQCh. 8 - Prob. 7MCQCh. 8 - Prob. 8MCQCh. 8 - Prob. 9MCQCh. 8 - (Chapter Supplement) Irish Industries purchased a...Ch. 8 - Prob. 8.1MECh. 8 - Prob. 8.2MECh. 8 - Prob. 8.3MECh. 8 - Prob. 8.4MECh. 8 - Computing Book Value (Double-Declining-Balance...Ch. 8 - Computing Book Value (Units-of-Production...Ch. 8 - Identifying Asset Impairment LO8-4 For each of the...Ch. 8 - Prob. 8.8MECh. 8 - Prob. 8.9MECh. 8 - Prob. 8.10MECh. 8 - Prob. 8.1ECh. 8 - Prob. 8.2ECh. 8 - Computing and Recording Cost and Depreciation of...Ch. 8 - Determining Financial Statement Effects of an...Ch. 8 - Determining Financial Statement Effects of an...Ch. 8 - Recording Depreciation and Repairs (Straight-Line...Ch. 8 - Prob. 8.7ECh. 8 - Prob. 8.8ECh. 8 - Computing Depreciation under Alternative Methods...Ch. 8 - Computing Depreciation under Alternative Methods...Ch. 8 - Prob. 8.11ECh. 8 - Prob. 8.12ECh. 8 - Prob. 8.13ECh. 8 - Computing Depreciation and Book Value for Two...Ch. 8 - Prob. 8.15ECh. 8 - Recording the Disposal of an Asset at Three...Ch. 8 - Prob. 8.17ECh. 8 - Prob. 8.18ECh. 8 - Prob. 8.19ECh. 8 - Prob. 8.20ECh. 8 - Prob. 8.21ECh. 8 - Prob. 8.22ECh. 8 - (Chapter Supplement) Recording a Change in...Ch. 8 - Prob. 8.24ECh. 8 - Prob. 8.25ECh. 8 - Explaining the Nature of a Long-Lived Asset and...Ch. 8 - Analyzing the Effects of Repairs, an Addition, and...Ch. 8 - Prob. 8.3PCh. 8 - Best Buy Co., Inc., headquartered in Richfield,...Ch. 8 - Evaluating the Effect of Alternative Depreciation...Ch. 8 - Recording and Interpreting the Disposal of Three...Ch. 8 - Prob. 8.7PCh. 8 - Prob. 8.8PCh. 8 - Computing Goodwill from the Purchase of a Business...Ch. 8 - Prob. 8.10PCh. 8 - Prob. 8.11PCh. 8 - Explaining the Nature of a Long-Lived Asset and...Ch. 8 - Prob. 8.2APCh. 8 - Computing the Acquisition Cost and Recording...Ch. 8 - Prob. 8.4APCh. 8 - Recording and Interpreting the Disposal of Three...Ch. 8 - Prob. 8.6APCh. 8 - Prob. 8.7APCh. 8 - Asset Acquisition, Depreciation, and Disposal Pool...Ch. 8 - Case A. Dr Pepper Snapple Croup, Inc., is a...Ch. 8 - Prob. 8.1BCOMPCh. 8 - Prob. 8.1CCOMPCh. 8 - Case D. Stewart Company reports the following...Ch. 8 - Case E. Matson Company purchased the following on...Ch. 8 - Prob. 8.1CPCh. 8 - Finding Financial Information LO8-1, 8-2, 8-6...Ch. 8 - Comparing Companies within an Industry Refer to...Ch. 8 - Prob. 8.4CPCh. 8 - Prob. 8.5CPCh. 8 - Prob. 8.6CPCh. 8 - Evaluating the Impact of Capitalized Interest on...
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