How much should be recognized as cost of the new machine?₱ 1,993,000₱ 1,930,000₱ 1,985,000₱ 2,025,000 Invoice price of machinery2,000,000Cash discount not taken40,000Freight on new machine10,000Cost of removing the old machine12,000Loss on disposal of the old machineGratuity paid to operator of the old machine whowas laid off150,00070,000Installation cost of new machine60,000Repair cost of new machine damaged in theprocess of installationTesting costs before machine was put into regular8,000operation15,000Salary of engineer for the duration of the trial run40,000Operating cost during first month of regular useCash allowance granted because the new machineproved to be of inferior quality250,000100,000

Cost of assets: The cost of an asset is not mere the list price but includes many other items too…

Answered: How much should be recognized as cost…

Business

Accounting

How much should be recognized as cost of the new machine? ₱ 1,993,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 43E

See similar textbooks

Similar questions

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.
Differential analysis for machine replacement Boyer Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is 60,000, the accumulated depreciation is 24,000, its remaining useful life is five years, and its residual value is negligible. On May 4 of the current year, a proposal was made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of 180,000. The automatic machine has an estimated useful life of five years and no significant residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on present and proposed operations: a. Prepare a differential analysis dated May 4 to determine whether to continue with ( Alternative 1) or replace (Alternative 2) the old machine. Prepare the analysis over the useful life of the new machine. b. Based only on the data presented, should the proposal be accepted? c. What are some of the other factors that should be considered before a final decision is made?
Cost Issues Deskin Company purchased a new machine to be used in its operations. The new machine was delivered by the supplier, installed by Deskin, and placed into operation. It was purchased under a long-term payment plan for which the interest charges approximated the prevailing market rates. The estimated useful life of the new machine is 10 years, and its estimated residual (salvage) value is significant. Normal maintenance was performed to keep the new machine in usable condition. Deskin also added a wing to the manufacturing building that it owns. The addition is an integral part of the building. Furthermore, Deskin made significant leasehold improvements to office space used as corporate headquarters. Required: 1. What costs should Deskin capitalize for the new machine? 2. Explain how Deskin should account for the normal maintenance performed on the new machine. 3. Explain how Deskin should account for the wing added to the manufacturing building. Where should the added wing be reported on Deskins financial statements? 4. Explain how Deskin should account for the leasehold improvements made to its office space. Where should the leasehold improvements be reported on Deskins financial statements?
Differential analysis report for machine replacement proposal Catalina Tooling Company is considering replacing a machine that has been used in its factory for two years. Relevant data associated with the operations of the old machine and the new machine, neither of which has any estimated residual value, are as follows: Annual nonmanufacturing operating expenses and revenue are not expected to be affected by the purchase of the new machine. Instructions List other factors that should be considered before a final decision is reached.
Ronson recently purchased a new boat to help ship product overseas. The following information is related to that purchase: purchase price $4,500,000 cost to bring boat to production facility $15,000 yearly insurance cost $12,000 pays annual maintenance cost of $22,000 received a 10% discount on sales price Determine the acquisition cost of the boat and record the journal entry needed.
On 1 May 2020, Ron Trading purchased a new machine. The following paymentsrelate to the machine.List price $21,500Purchase discount $2,000Transportation cost $300Repair of damage parts incurred in transporting the machine $1,000Fees paid to test the machine before use $500Fees paid to the installer to install the machine $800Machine operator’s salary for the first month of operation $3,000Maintenance costs for the first month of operation $300(i) Identify and compute the cost of the machine to be recognised. Explainyour reasoning.(ii) Journalise the transactions. Assume the above payments are paid in cash.
A machine costs $40,000 and had an accumulated depreciation of $30,000. It was traded in on a new machine, which had an estimated 20-year life and a cash price of $50,000. If a $7,000 trade-in allowance was received on the old machine, the new machine should be valued at Multiple Choice $53,000 $10,000 $50,000 $40,000 $47,000 Please don't provide solution image based thanku
Don Williams is General manager of Carib Systems who received a proposal to replace theVersion 1 with Version 2 Point of Sales (POS) equipment at the company. Williams collectsdata about the proposal on Version 1 and Version 2 as follows:Version 1 POS Version 2 POSOriginal cost $425,000 $170,000Useful life 5 years 3 yearsCurrent age 2 years 0 yearsRemaining useful life 3 years 3 yearsAccumulated depreciation $195,000 Not purchased yetCurrent book value $230,000 Not purchased yetCurrent disposal value (in cash) $120,000 Not purchased yetFinal disposal value (in cash 3 years from now) $0 $0Annual POS cash operating costs $60,000 $20,000Annual revenues $1,250,000 $1,250,000Annual non POS related operating costs $920,000 $920,000Required:As the Management Accountant:1. Compare the costs of Version 1 POS and Version 2 POS. Consider the cumulative resultsfor the three years together, ignoring the time value of money and income taxes.
On 1 October 20X5 Dearing acquired a machine under the following terms. Hours $ Manufacturer's base price 1,050,000 Trade discount (applying to base price only) 20% Early settlement discount taken (on the payable amount of the base cost only) 5% Freight charges 30,000 Electrical installation cost 28,000 Staff training in use of machine 40,000 Pre-production testing 22,000 Purchase of a three-year maintenance contract 60,000 On 1 October 20X7 Dearing decided to upgrade the machine by adding new components at a cost of $200,000. This upgrade led to a reduction in the production time per unit of the goods being manufactured using the machine. What amount should be recognised under non-current assets as the cost of the machine? A $840,000 B $920,000 C $898,000 D $870,000
Granite Company purchased a machine costing $121,000, terms 2/10, n/30. The machine was shipped FOB shipping point and freight charges were $2,100. The machine requires special mounting and wiring connections costing $10,100. When installing the machine, $1,600 in damages occurred. Compute the cost recorded for this machine assuming Granite paid within the discount period.
Asset replacementCertain production equipment used by Dayton Mechanical has become obsolete relative to current technology. The company is considering whether it should keep or replace its existing equipment. To aid in this decision, the company’s controller gathered the following data: Old Equipment New Equipment Original cost $770,000 $871,200 Remaining life 5 years 5 years Accumulated depreciation $347,600 $0 Annual cash operating costs $140,800 $35,200 Current salvage value $193,600 NA Salvage value in five years $0 $0 a. What is the total dollar amount of any sunk costs in the data. $Answerb. What is the total dollar amount of any irrelevant (nondifferential) future costs. $Answerc. What is the total dollar amount of all relevant costs to the equipment replacement decision. $Answerd. What is the total dollar amount of the opportunity costs associated with the alternative of keeping the old equipment? $Answere. What is the incremental cost to purchase the…
ASAP!! (A) A company bought machine on July 1, 1998 at a list price of Rs.80, 000. Trade discount availed 10%. Credit term is 2.5/10, n/45. Company paid following expenses: Installation charges Rs.5000 Foundation charges Rs.12500 Trial run cost Rs. 2000 The estimated life of the machine is expected to be 6 years and expected scrap value is Rs.9500. Required: 1) Compute total cost of the machine Compute depreciation for the year 1998-2003 under following methods using schedule: Straight line method MACRS method Double declining balance method B) Walker Motel recently purchased new exercise equipment for its exercise room. The following information refers to the purchase and installation of this equipment: The list price of the equipment was $40,000; however, Walker qualified for a “special discount” of…