Jarry Corporation paid $2,500 cash for mechanical work to be conducted on one of the company's factory machines. The mechanical work extended the useful life of the machine beyond the original estimate, but did not increase the productive capacity of the machine. How should Jarry Corporation account for this cash outlay? Jarry Corporation should account for this as an improvement and capitalize the expenditure as an are Jarry Corporation should account for this as an ordinary repair and maintenance and expense the expenditur O Jarry Corporation should account for the expenditure as part of cost of goods sold. O Jarry Corporation should account for the expenditure by creating an allowance account.

Jarry Corporation paid $2,500 cash for mechanical work to be conducted on one of the company's factory machines. The mechanical work extended the useful life of the machine beyond the original estimate, but did not increase the productive capacity of the machine. How should Jarry Corporation account for this cash outlay? Jarry Corporation should account for this as an improvement and capitalize the expenditure as an are Jarry Corporation should account for this as an ordinary repair and maintenance and expense the expenditur O Jarry Corporation should account for the expenditure as part of cost of goods sold. O Jarry Corporation should account for the expenditure by creating an allowance account.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 2EA: Jada Company had the following transactions during the year: Purchased a machine for $500,000 using...

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Jada Company had the following transactions during the year: Purchased a machine for $500,000 using a long-term note to finance it Paid $500 for ordinary repair Purchased a patent for $45,000 cash Paid $200,000 cash for addition to an existing building Paid $60,000 for monthly salaries Paid $250 for routine maintenance on equipment Paid $10,000 for extraordinary repairs If all transactions were recorded properly, what amount did Jada capitalize for the year, and what amount did Jada expense for the year?
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In October, Dean Company exchanged an old packing machine costing P240,000 and 50% depreciated, for a dissimilar used machine and paid a cash difference of P32,000. The market value of the old packaging machine was determined to be P140,000. How much is the cost of the newly acquired machine and the amount of gain or loss, respectively, that Dean should record on this exchange?
Corning Industries owns a patent for which it paid $77,000. At the end of the current year, accumulated amortization on the patent totaled $14,000. Due to adverse economic conditions, Corning’s management determined that it should assess whether an impairment loss should be recognized for the patent. The estimated undiscounted future cash flows to be provided by the patent total $45,000, and the patent's fair value is $30,000. (a) What is the amount of the impairment loss, if any, on the patent at the end of the current year? (b) What is the book value of the patent after any impairment loss is recorded?
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