FINANCIAL ACCOUNTING>IC<
15th Edition
ISBN: 9781119344988
Author: Kimmel
Publisher: WILEY C
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 9, Problem 9.1E
(a)
To determine
Plant Assets: Plant assets refer to the fixed assets having a useful life of more than a year that is, acquired by a company to be used in its business activities, for generating revenue.
To explain: Application ofHistorical cost principle for determining the acquisition of plant assets.
(b)
To determine
To Indicate: the accounts title to which each expenditure should be debited
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On March 1, 2017, Sunland Company acquired real estate, on which it planned to construct a small office building, by paying $84,000 in cash. An old warehouse on the property was demolished at a
cost of $9,000; the salvaged materials were sold for $1,860. Additional expenditures before construction began included $1,360 attorney's fee for work concerning the land purchase, $4,900 real
estate broker's fee, $8,860 architect's fee, and $14,800 to put in driveways and a parking lot.
(a) Determine the amount to be reported as the cost of the land.
Cost of land
On January 1,
2018,
Monster
Bar & Grill purchased a building, paying
$55,000
cash and signing a
$107,000
note payable. The company paid another
$61,000
to remodel the building. Furniture and fixtures cost
$53,000,
and dishes and
supplies—a
current
asset—were
obtained for
$8,700.
All expenditures were for cash. Assume that all of these expenditures occurred on January 1,
2018.
depreciation information:
Monster
is depreciating the building over 25 years using the straight-line method, with estimated residual value of
$59,000.
The furniture and fixtures will be replaced at the end of five years and are being depreciated using thedouble-declining-balance method, with a residual value of zero. At the end of the first year, the company still had dishes and supplies worth
$1,500.
Show what the company will report for supplies, plant assets, and cash flows at the end of the first year on its income statement, balance sheet, and statement of cash flows.
Begin with…
Clarion Co. completed the following transactions and events involving the purchase and operation of equipment in
its business.
2016
Paid $300,000 cash plus $30,000 in sales tax and $18,500 in transportation (FOB shipping point) for
a new loader, which is estimated to have a four-year life and a $25,500 salvage value. Loader costs
are recorded in the Machinery account.
Paid $15,000 to enclose the cab and install air conditioning in the loader to enable operations under
harsher conditions. This increased the estimated salvage value of the loader by another $1,500.
Recorded double-declining balance depreciation on the loader.
Jan.
1
Jan.
3
Dec.
31
2017
Jan.
1
Paid $50,400 to overhaul the loader's engine, which increased the loader's estimated useful life by
two years.
Paid $1,800 to repair the loader after the operator backed it into a tree.
Recorded double-declining balance depreciation on the loader.
Sold the loader for $250,000 cash.
Feb.
17
Dec.
31
Dec.
31
REQUIRED: Prepare journal…
Chapter 9 Solutions
FINANCIAL ACCOUNTING>IC<
Ch. 9 - Prob. 1QCh. 9 - Prob. 2QCh. 9 - Prob. 3QCh. 9 - Prob. 4QCh. 9 - Prob. 5QCh. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Prob. 8QCh. 9 - Prob. 9QCh. 9 - In the fourth year of an assets 5-year useful...
Ch. 9 - Prob. 11QCh. 9 - Prob. 12QCh. 9 - Prob. 13QCh. 9 - Prob. 14QCh. 9 - Prob. 15QCh. 9 - Prob. 16QCh. 9 - Prob. 17QCh. 9 - Prob. 18QCh. 9 - Prob. 19QCh. 9 - Prob. 20QCh. 9 - Prob. 21QCh. 9 - Prob. 22QCh. 9 - Give an example of an industry that would be...Ch. 9 - Prob. 24QCh. 9 - Prob. 25QCh. 9 - Prob. 26QCh. 9 - Prob. 27QCh. 9 - Prob. 9.1BECh. 9 - Prob. 9.2BECh. 9 - Prob. 9.3BECh. 9 - Prob. 9.4BECh. 9 - Prob. 9.5BECh. 9 - Prob. 9.6BECh. 9 - Prob. 9.7BECh. 9 - Prob. 9.8BECh. 9 - Prob. 9.9BECh. 9 - Prob. 9.10BECh. 9 - Prob. 9.11BECh. 9 - Prob. 9.12BECh. 9 - Prob. 9.13BECh. 9 - Prob. 9.14BECh. 9 - Prob. 9.1DIECh. 9 - Prob. 9.2ADIECh. 9 - Prob. 9.2BDIECh. 9 - Prob. 9.3DIECh. 9 - Match the statement with the term most directly...Ch. 9 - Prob. 9.5DIECh. 9 - Prob. 9.1ECh. 9 - Prob. 9.2ECh. 9 - Prob. 9.3ECh. 9 - Prob. 9.4ECh. 9 - Prob. 9.5ECh. 9 - Prob. 9.6ECh. 9 - Prob. 9.7ECh. 9 - Prob. 9.8ECh. 9 - Prob. 9.9ECh. 9 - Prob. 9.10ECh. 9 - Prob. 9.11ECh. 9 - Prob. 9.12ECh. 9 - Prob. 9.13ECh. 9 - Prob. 9.14ECh. 9 - Prob. 9.15ECh. 9 - Prob. 9.16ECh. 9 - Prob. 9.17ECh. 9 - Prob. 9.18ECh. 9 - Prob. 9.19ECh. 9 - Prob. 9.20ECh. 9 - Prob. 9.1APCh. 9 - Prob. 9.2APCh. 9 - Prob. 9.3APCh. 9 - Prob. 9.4APCh. 9 - Prob. 9.5APCh. 9 - Prob. 9.6APCh. 9 - Prob. 9.7APCh. 9 - Prob. 9.8APCh. 9 - Prob. 9.9APCh. 9 - Prob. 9.1CACRCh. 9 - Prob. 9.2CACRCh. 9 - Prob. 9.1EYCTCh. 9 - Prob. 9.2EYCTCh. 9 - Prob. 9.3EYCTCh. 9 - Prob. 9.4EYCTCh. 9 - Prob. 9.6EYCTCh. 9 - Prob. 9.7EYCTCh. 9 - Prob. 9.8EYCTCh. 9 - Prob. 9.9EYCTCh. 9 - Prob. 9.10EYCTCh. 9 - CONSIDERING PEOPLE, PLANET, AND PROFIT The March...Ch. 9 - Prob. 9.1IFRSCh. 9 - Prob. 9.2IFRSCh. 9 - Prob. 9.3IFRSCh. 9 - Prob. 9.4IFRS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated five machines for $100,000 to improve efficiency in production of their remaining useful life of five years Low-cost repairs throughout the year totaled $70,000 Replaced a broken gear on a machine for $10,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?arrow_forwardCapital versus Revenue Expenditures On January 1, 2014, Jose Company purchased a building for $200,000 and a delivery truck for $20,000. The following expenditures have been incurred during 2016: • The building was painted at a cost of $5,000. • To prevent leaking, new windows were installed in the building at a cost of $10,000. • To improve production, a new conveyor system was installed at a cost of $40,000. • The delivery truck was repainted with a new company logo at a cost of $1,000. • To allow better handling of large loads, a hydraulic lift system was installed on the truck at a cost of $5,000. • The trucks engine was overhauled at a cost of $4,000. Required Determine which of those costs should be capitalized. Also record the journal entry for the capitalized costs. Assume that all costs were incurred on January 1, 2016. Determine the amount of depreciation for the year 2016. The company uses the straight-line method and depreciates the building over 25 years and the truck over six years. Assume zero residual value for all assets. How would the assets appear on the balance sheet of December 31, 2016?arrow_forwardWenner Furnace corp. purchased machinery for $279,000 on may 1, 2012. it is estimated that it will have a useful life of 10 years , salvage value of $15,000, production of 240,000units, and working hours of 25,000 units. During 2013, wenner corp. uses the machinery for 2,650 hours, and the machinery produces 25,000 units. Compute the depriciation charge for 2013 under each of the following methods A) Straight line B) Units-of-output C) working hour D) Sum of the years digit E)Double declining balancearrow_forward
- On March 1, 2017, Geoffrey Company acquired real estate, on which it planned to construct a small office building, by paying $85,000 in cash. An old warehouse on the property was demolished at a cost of $8,200; the salvaged materials were so for $2,200. Additional expenditures before construction began included $1,500 attorney's fee for work concerning the land purchase, $5,500 real estate broker's fee, $9,100 architect's fee, and $16,000 to put in driveways and a parking lot. Instructions (a) Determine the amount to be reported as the cost of the land. (b) For each cost not used in part (a), indicate the account to be increasedarrow_forwardIn March, 2017, Mallory Mines Co. purchased a coal mine for $8,000,000. Removable coal is estimated at 1,500,000 tons. Mallory is required to restore the land at an estimated cost of $960,000. The company incurred $200,000 of development costs preparing the mine for production. During 2017, 360,000 tons were removed and sold. The total amount of depletion that Mallory should record for 2017 is Select one: a. $2,428,800. b. $2,198,400. • c. $1,619,200. d. $1,465,600.arrow_forwardOn January 1, 2017, Salina Company purchased land and a building for $2,240,000. At the time of the purchase, it was estimated that the building had a market value of $1,400,000. On January 5, Salina installed a fence around the property at a cost of $14,000. Given this information, the entry to record the cost of the fence would include a a.Debit to Fence Expense for $14,000. b.Debit to Land for $14,000. c.Credit to Land for $14,000. d.Debit to Land Improvements for $14,000.arrow_forward
- On January 1, 2018, Absolutely Bar & Grill purchased a building, paying $57,000 cash and signing a $100,000 note payable. The company paid another $66,000 to remodel the building. Furniture and fixtures cost $56,000, and dishes and supplies—a current asset—were obtained for $8,600. All expenditures were for cash. Assume that all of these expenditures occurred on January 1, 2018. Absolutely is depreciating the building over 25 years using the straight-line method, with estimated residual value of $54,000. The furniture and fixtures will be replaced at the end of five years and are being depreciated using thedouble-declining-balance method, with a residual value of zero. At the end of the first year, the company still had dishes and supplies worth $1,900. Show what the company will report for supplies, plant assets, and cash flows at the end of the first year on its income statement, balance sheet, and statement of cash flows. Begin with the income statement.…arrow_forwardOn July 1, 2016, Drenz Inc. purchased land and incurred other costs relative to the construction of a new warehouse. A summary of economic activities is listed below: Purchase price 925,000 Title Insurance 7,500 Legal fees to purchase land 5,000 Cost of razing old building on lot 42,500 Proceeds from sale of salvageable materials (6,000) Property taxes, January 1, 2016 - June 30, 2016 15,000 Cost of grading and filling building site 45,000 Cost of building construction 3,100,000 Interest on construction loan 60,000 Cost of constructing driveway 400,000 Cost of parking lot and fencing 60,000 Compute for the cost of the land?arrow_forwardThe cost of equipment purchased by Charleston Inc. on June 1, 2017 is $89,000. It is estimated that the machine will have a $5,000 salvage value at the end of its service life. Its service life is estimated at 7 years, its total working hours are estimated at 42,000 and its total production is estimated at 525,000 units. During 2017 the machine was operated 6,000 hours and produced 55,000 units. During 2018 the machine was operated 5,500 hours and produced 48,000 units. Instruction: Compute depreciation expense on the machine for the year ending December 31, 2017 and the year ending December 31, 2018 using the following methods 1. Straight Line Method 2. Units-of-output 3. Working Hours 4. Sum-of-the-years-digits 5. Declining Balance(twice the SL rate)arrow_forward
- The Lane Company incurred the following expenditures in January 2016: (1) research and development costs of $510,000 that resulted in a new product that was patented during the year, (2) $12,000 in legal fees to have the patent registered, (3) $100,000 in advertising costs to develop a trademark for the newly patented product, (4) Legal fees of $8,000 incurred with the registration of the trademark, which will only be used for five years, and (5) $25,000 of advertising costs to promote its good name. Benefits to be derived from the patent are expected to last for five years. The president believes the promotion of Lane's good name will benefit the firm for three years. How much amortization expense should Lane recognize for 2016?arrow_forwardDuring 2006, Fox company made the following expenditures relating to plant machinery and equipment. Renovation of a group of machines at a cost of $50,000 to secure greater efficiency in production over their remaining 5- year useful lives. The project was completed on December 31, 2006. Continuing, frequent, and low cost repairs at a cost of $35,000. A broken gear on a machine was replaced at a cost of $5,000. What total amount should be charged to repairs and maintenance in 2006? A. $35,000 B. $40,000 C. $85,000 D. $90,000arrow_forwardThe Wagner Company made the following expenditures for research and development early in 2014: $80,000 for materials, $100,000 for contract services, $80,000 for employee salaries, and $800,000 for a building with an expected life of 20 years to be used for current and future research projects. Wagner uses straight-line depreciation. The company allocated $20,000 in overhead to research and development. What is Wagners' research and development expense for 2014? a. $200,000 b. $960,000 c. $320,000 d. $220,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Accounting for Derivatives_1.mp4; Author: DVRamanaXIMB;https://www.youtube.com/watch?v=kZky1jIiCN0;License: Standard Youtube License
Depreciation|(Concept and Methods); Author: easyCBSE commerce lectures;https://www.youtube.com/watch?v=w4lScJke6CA;License: Standard YouTube License, CC-BY