Chapter 9 - q2

Exercise One On July 1, 2022, Phillips Inc. Invested $480,000 in a mine estimated to have 800,000 tonnes of ore. At the end of production at the mine, the company estimates it will have to spend $150,000 to restore the site to an environmentally acceptable condition. The property will then be sold for $90,000. During the last six months of 2022, 100,000 tonnes of ore were mined and sold. Amortizable Cost per Unit: Amount of Amortization Allocated: Amount to be allocated to the restoration liability: a) Prepare the journal entry to record the depletion expense. Date Particulars Debit Credit

PROBLEM 24-4(IFRS)

MC algo 9-6 Calculating Salvage Value A company is evaluating a new 4-year project. The equipment necessary for the project will cost $3,100,000 and can be sold for $675,000 at the end of the project. The asset is in the 5-year MACRS class. The depreciation percentage each year is 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company's tax rate is 23 percent. What is the aftertax salvage value of the equipment? Multiple Choice $519,750 $560,819 $707,044 $675,000 $642,956

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21 Beck Construction Company began work on a new building project on January 1, 2023. The project is to be completed by December 31, 2025, for a fixed price of $131 million. The following are the actual costs incurred and estimates of remaining costs to complete the project that were made by Beck's accounting staff: Years Actual costs incurred in each year Estimated remaining costs to complete the project (measured atDecember 31 of each year) 2023 $ 36 million $ 72 million 2024 $ 57 million $ 57 million 2025 $ 41 million $ 0 million Required: What amount of gross profit (or loss) would Beck record on this project in each year, assuming that Beck recognizes revenue for this project upon completion of the project?

Exercise 24-4 (Algo) Payback period, unequal cash flows, and depreciation adjustment LO P1 A machine can be purchased for $130,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $26,000. Income Year 1 $8,800 Year 2 $21,800 Year 3 $57,000 Year 4 $32,900 Year 5 $87,200 Compute the machine's payback period. (Round payback period answer to 2 decimal places.) × Answer is complete but not entirely correct. Year Net Income Depreciation Net Cash Flow Cumulative Net Cash Flow Initial invest $ (130,000) $ (130,000) Year 1 $ 8,800 $ 26,000 34,800 34,800 x Year 2 21,800 26,000 47,800 82,600 × Year 3 57,000 26,000 83,000 130,000 ☑ Year 4 32,900 26,000 Year 5 87,200 26,000 Payback period = 2.57 years

14 ants eBook Print References Triad Corporation has established a joint venture with Tobacco Road Construction, Inc., to build a toll road in North Carolina. The initial investment in paving equipment is $145 million. The equipment will be fully depreciated using the straight-line method over its economic life of five years. Earnings before interest, taxes, and depreciation collected from the toll road are projected to be $21.7 million per annum for 20 years starting from the end of the first year. The corporate tax rate is 25 percent. The required rate of return for the project under all-equity financing is 14 percent. The pretax cost of debt for the joint partnership is 8.3 percent. To encourage investment in the country's Infrastructure, the U.S. government will subsidize the project with a $65 million, 15-year loan at an interest rate of 4.8 percent per year. All principal will be repaid in one balloon payment at the end of Year 15. What is the adjusted present value of this…

Exercise 24-4 (Algo) Payback period, unequal cash flows, and depreciation adjustment LO P1 A machine can be purchased for $200,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $40.000. Income Year 1 $13,500 Year 2 $33,500 Year 3 $83,000 Year 4 $50,500 Year 5 $134,000 Compute the machine's payback period. (Round payback period answer to 2 decimal places.) Year Net Income Depreciation Net Cash Flow Cumulative Net Cash Flow Initial invest $ (200,000) $ (200,000) Year 1 $ 13,500 Year 2 33,500 Year 3 83,000 Year 4 50,500 Year 5 134,000 0 0 Payback period=

Exercise 12-16 b-c Blossom Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2019, the company expends $325,500 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will be derived from it.           The project is completed in 2020, and a successful patent is obtained. The R&D costs to complete the project are $115,500. The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2020 total $17,500. The patent has an expected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit…

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Exercise 10-07 Pearl Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $8,000,000 on January 1, 2020. Pearl expected to complete the building by December 31, 2020. Pearl has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2019   $3,200,000 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2021   2,240,000 Long-term loan-11% interest, payable on January 1 of each  year. Principal payable on January 1, 2024   1,600,000               Your answer is incorrect.  Try again.     Assume that Pearl completed the office and warehouse building on December 31, 2020, as planned at a total cost of $8,320,000, and the weighted-average amount of accumulated expenditures was $5,760,000. Compute the avoidable interest on this…

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Exercise 24-2 (Algo) Payback period, equal cash flows, and depreciation adjustment LO P1 Quary Company is considering an investment in machinery with the following information. Initial investment Useful life Salvage value Expected sales per year Required A Required B (a) Compute the investment's annual income and annual net cash flow. (b) Compute the investment's payback period. $ 380,000 Complete this question by entering your answers in the tabs below. Annual Amounts 9 years $ 20,000 19,000 units Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Selling price per unit Compute the investment's annual income and annual net cash flow. Income Net cash flow Required A $ Income 0 $ Cash Flow Required B > 0 $ 85,500 40,000 9,500 $ 10

Problem 11-02 The cost of equipment purchased by Skysong, Inc., on June 1, 2020, is $107,100. It is estimated that the machine will have a $6,300 salvage value at the end of its service life. Its service life is estimated at 7 years, its total working hours are estimated at 50,400, and its total production is estimated at 630,000 units. During 2020, the machine was operated 6,420o hours and produced 58,850 units. During 2021, the machine was operated 5,885 hours and produced 51,300 units. Compute depreciation expense on the machine for the year ending December 31, 2020, and the year ending December 31, 2021, using the following methods. (Round depreciation per unit to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 45,892.) 2020 2021 (a) Straight-line (b) Units-of-output (c) Working hours $1 (d) Sum-of-the-years'-digits (e) Double-declining-balance (twice the straight-line rate) Click if you would like to Show Work for this question: Open Show Work

Exercise 10-24 On December 31, 2020, Vaughn Inc. has a machine with a book value of $1,353,600. The original cost and related accumulated depreciation at this date are as follows. Machine   $1,872,000 Less: Accumulated depreciation   518,400 Book value   $1,353,600 Depreciation is computed at $86,400 per year on a straight-line basis.Presented below is a set of independent situations. For each independent situation, indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal.               Your answer is partially correct.  Try again.     A fire completely destroys the machine on August 31, 2021. An insurance settlement of $619,200 was received for this casualty. Assume the settlement was received immediately. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If…

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