Company A purchased a band saw for $300,000. Three months later it discovered that the saw does not work as well as it should and it is only worth $200,000. What is this condition called? What must the company do in this case? Note: You are not required to prepare a journal entry.
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Company A purchased a band saw for $300,000. Three months later it discovered that the saw does not work as well as it should and it is only worth $200,000. What is this condition called? What must the company do in this case? Note: You are not required to prepare a
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- A company purchased a building twenty years ago for $150,000. The building currently has an appraised market value of $235,000. The company reports the building on its balance sheet at $235,000. What concept or principle has been violated? A. separate entity concept B. recognition principle C. monetary measurement concept D. cost principleA company purchased a machine at the cost of $759,600 on March 1 of year 1. On the same day, the business paid the shipping company $5,600 to deliver the machine and paid $14,500 to another business to install and test the new machine. The annual insurance policy for the new machine is $8,600. The company’s fiscal year end is November 30. The company’s accounting policy is to depreciate all machines using the double diminishing balance method. The machine has an expected useful lifespan of five-years and an estimated residual value of $30,000. However, the company discovered the machine did not meet its business requirements, so it sold the machine on September 1, year 3, for $156,500. Perform all your calculations to the nearest dollar. Show all your work. Instructions: Write you answers by hand, scan your working papers and upload to the link on the main page of the Moodle website as a PDF file. Show any calculations. Printing the problem information is permitted but only for…On January 1, 2011, Chicaga Furniture purchased a new delivery truck The company paid $65,000 for the truck, $12,000 for an annual insurance policy and $1,300 for a motor vehicle license. The truck has an estimated residual value of $5,000 at the end of its useful life and Chicago Furniture uses the double-declining-balance method for other similar assets. At what net amount will Chicago Furniture record the truck on its statement of financial position at December 31, 2011?
- In September, Morrison purchased a new piece of machinery that will be used to manufacture its top selling product. The purchase price of the machine was $2,215. In addition, Morrison also paid: freight, $200; installation, $570; testing , $900; and repairs due to mishandling, $300. Ignoring the depreciation expense, at what cost should the machinery be recorded on the balance sheet?DETL Corp. made an ordinary repair to a delivery truck with a remaining useful life of three years at a cost of $200. DETL's accountant debited the asset account, Equipment. Was this treatment an error, and if so, what will be the effect on DETL's financial statements?Early in the fiscal year, The Beanery purchases a delivery vehicle for $40,000. At the end of the year, the machine has a fair value of $33,000. The company controller records depreciation expense of $7,000 for the year, the decline in the vehicle’s value. Explain why the controller’s approach to recording depreciation expense is not correct.
- A company purchased a computer that cost $10,000, It had an estimated useful life of 5 years and no residual value. The computer was depreciated by the straight-line method and it was sold at the end of the second year of use for $5,000 cash. The company should record:A company purchased a commercial dishwasher by paying cash of $5,900. The dishwasher's fair value on the date of the purchase was $6,270. The company incurred $300 in transportation costs, $310 installation fees, and paid a $120 fine for illegal parking while the dishwasher was being delivered. For what amount will the company record the dishwasher?Creative Solutions purchased a patent from Russell Lazarus, an inventor. At the time of the purchase, the patent had two years remaining. The president of Creative Solutions decided to have the accountant amortize the cost of the patent, $200,000, over 10 years rather than two years. His reasoning was that the $200,000 has already been spent and stockholders might ask a lot of questions about a $100,000 expense showing up on the income statement but probably wouldn’t pay much attention to a $20,000 expense. What is Creative Solutions’ ethical responsibility to the company’s stockholders? According to GAAP, how should the amortization of patents be treated? Write a short paragraph explaining similarities and differences between plant assets and intangible assets. In groups of two or three, determine an appropriate method of depreciation, depletion, or amortization of the following assets for financial reporting purposes: (a) a car used as a taxi, (b) a parcel of land that will…
- Woods, Inc. purchased a new engine for a long-distance truck in January, 2021. The engine cost $240,000 and should give the truck an additional 500,000 miles of life. Inadvertently, the engine was charged to truck repairs expense. The error was found in December, 2022. The company records depreciation based on miles driven with no salvage value. Miles driven in 2021 were 80,000 and 70,000 in 2022. Which one of the following entries properly corrects all the errors through December 31, 2022? (Ignore income taxes.) (Round any intermediate calculations and your final answers to the nearest dollar.) Group of answer choices Truck 240,000 Depreciation Expense--Truck (2022) 33,600 Accumulated Depreciation -Truck 72,000 Retained Earnings 201,600 Retained Earnings 201,600 Depreciation Expense (2021) -Truck 38,400 Truck 240,000 Truck 240,000 Accumulated Depreciation - Truck33,600 Retained Earnings 206,400 Truck 240,000 …When DeSoto Water Works purchased a machine at the end of 2017 at a cost of $65,000, the company debitedBuildings and credited Cash $65,000. The error was discovered in 2018. What journal entry will DeSoto use tocorrect the error? What other step(s) would be taken in connection with the error?The Jessica Co. has the following errors on its books as of December 31, 2020. The books for 2020 have not yet been closed. a. On January 1, 2018, a machine had been purchased for $6,500. The machine had an estimated life of five years, but it was expensed in error. Straight-line depreciation with no salvage value should have been used. b. On January 1, 2019, the company bought a four-year insurance policy for $800 and immediately charged the full premium to expense. Required: Prepare journal entries to correct these errors on December 31, 2020. Ignore income taxes.