following costs related to its office building. You can assume all costs were paid in cash. (You do not need to record any depreciation related to the office building.) Installed a second air conditioner because it was determined that one air conditioning unit could not sufficiently cool the building, $7,000. Repaired and painted wall damage, $800. Replaced the building roof which was estimated to have a remain

following costs related to its office building. You can assume all costs were paid in cash. (You do not need to record any depreciation related to the office building.) Installed a second air conditioner because it was determined that one air conditioning unit could not sufficiently cool the building, $7,000. Repaired and painted wall damage, $800. Replaced the building roof which was estimated to have a remain

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter2: Income Tax Concepts

Section: Chapter Questions

Problem 59P

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During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated seven machines for $250,000 to improve efficiency in production of their remaining useful life of eight years Low-cost repairs throughout the year totaled $79,000 Replaced a broken gear on a machine for $6,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?
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?
A Cost of a Fixed Asset Mist City Car Wash purchased a new brushless car-washing machine for one of its bays. The machine cost $41,700. Mist City borrowed the purchase price from its bank on a 1-year, 8% note payable. Mist City paid $975 to have the machine transported to its place of business and an additional $200 in shipping insurance. Mist City incurred the following costs as a part of the installation: During the testing process, one of the motors became defective when soap and water entered the motor because its cover had not been installed properly by Mist Citys employees. The motor was replaced at a cost of $640. Required: 1. Compute the cost of the car-washing machine. 2. CONCEPTUAL CONNECTION Explain why any costs were excluded from the cost of the machine.
Sand River Sales has a fork truck used in its warehouse operations. The truck had an original useful life of five years. However, after depreciating the asset for three years, the company makes a major repair that extends the life by four years. What is the remaining useful life after the major repair?
Grandorf Company replaced the engine in a truck for 8,000 and expects the new engine will extend the life of the truck two years beyond the original estimated life. Related information is provided below. Cost of truck 65,000 Salvage value 5,000 Original estimated life 6 years The truck was purchased on January 1, 20-1. The engine was replaced on January 1, 20-6. Using straight-line depreciation, compute depreciation expense for 20-6.
On January 1, 20x2, Kent Corporation purchased a machine for $50,000. Kent paid shopping expenses of $500 as well as installation costs of $1,200. The machine was estimated to have a useful life of 10 years and estimated salvage value of $3,000. In January 20x3, additions costing $3,600 were made to the machine in order to comply with pollution control ordinances. These additions neither prolonged the life of the machine nor did they have any salvage value. If Kent records depreciation under the straight-line method, depreciation expense for 20x3 is a.$4,870 b.$5,170 c.$5,270 d.$5,570
The company treasurer must determine the depreciation method for office furniture that costs $50,000 and has no salvage value at the end of a 10-year depreciable life. Compute the depreciation using the Straight-Line method
Belltone Company made the following expenditures related to its 10-year-old manufacturing facility: 1. The heating system was replaced at a cost of $250,000. The cost of the old system was not known. The company accounts for improvements as reductions of accumulated depreciation. 2. A new wing was added at a cost of $750,000. The new wing substantially increases the productive capacity of the plant. 3. Annual building maintenance was performed at a cost of $14,000. 4. All of the equipment on the assembly line in the plant was rearranged at a cost of $50,000. The rearrangement clearly increases the productive capacity of the plant. Required: Prepare journal entries to record each of the above expenditures.
Houston’s Shredding Service has just completed a minor repair on a shredding machine. The repair cost was $1,010, and the book value prior to the repair was $4,750. In addition, the company spent $6,000 to replace the roof on a building. The new roof extended the life of the building by five years. Prior to the roof replacement, the general ledger reflected the Building account at $89,300 and related Accumulated Depreciation account at $44,300. After the work was completed, what book value should Houston’s report on the balance sheet for the shredding machine and the building? Book Value Shreddding Machine Building
Bill’s Wrecker Service has just completed a minor repair on a tow truck. The repair cost was $1,550, and the book value prior to the repair was $6,500. In addition, the company spent $12,000 to replace the roof on a building. The new roof extended the life of the building by five years. Prior to the roof replacement, the general ledger reflected the Building account at $85,000 and related Accumulated Depreciation account at $32,000. Required After the work was completed, what book value should appear on the balance sheet for the tow truck and the building? TOW TRUCK: Building:
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 had a building destroyed by fire. The building originally cost $650,000 and its accumulated depreciation as of the date of the fire was $300,000. The company received $400,000 cash from an insurance policy that covered the building and will use that money to help rebuild. Prepare the single journal entry to record the destruction of the building and the receipt of cash from the insurance company.