Maintenance charge 4,000 An additional component to increase capacity 3,000 Spare parts 3,500 Total 125,500 The lorry is depreciated on a straight-line basis over a four-year life and the estimated residual value $38,000. ABC Co. prepares their accounts on 31 December each year, the company policy is to charge depreciation on a month for month basis. After exactly two years and three months, the lorry is out of order and sold for $23,000. a) What amount should be used as the basis for depreciation of the lorry? b) What is the depreciable amount of the lorry? c) Calculate the depreciation on lorry for each of the years 20x1, 20x2, and 20x3.

Maintenance charge 4,000 An additional component to increase capacity 3,000 Spare parts 3,500 Total 125,500 The lorry is depreciated on a straight-line basis over a four-year life and the estimated residual value $38,000. ABC Co. prepares their accounts on 31 December each year, the company policy is to charge depreciation on a month for month basis. After exactly two years and three months, the lorry is out of order and sold for $23,000. a) What amount should be used as the basis for depreciation of the lorry? b) What is the depreciable amount of the lorry? c) Calculate the depreciation on lorry for each of the years 20x1, 20x2, and 20x3.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 5EA: Steele Corp. purchases equipment for $25,000. Regarding the purchase, Steele recorded the following...

See similar textbooks

Similar questions

Steele Corp. purchases equipment for $25,000. Regarding the purchase, Steele recorded the following transactions: Paid shipping of $1,000 Paid installation fees of $2,000 Pays annual maintenance cost of $200 Received a 5% discount on $25,000 sales price Determine the acquisition cost of the equipment.
The following information pertains to the January 2, year 2 transaction replacing a print machine for Hidden Creek Enterprises, Inc.Net book value – old print machine $20,000Total cost of new machine $180,000Down payment on new machine $35,000Sale price of old machine $30,000Tax rate 30%What is the net total of relevant costs on January 2, year 2?a. $173,000b. $153,000c. $28,000d. 8,000.
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
Falther Inc. acquired a new processing machine: Invoice cost P1,800,000 Transportation cost 50,000 Installation cost 120,000 The purchase agreement stipulated that if payment is made within 10 days, the entity will receive a 5% discount. However, the entity paid after the discount time had expired. The new entity's main engineer spent two-thirds of his time on the new machine's trial run. The remuneration is P90,000 per month. The company requested for an allowance from the supplier since the machine's performance was below par. A cash allowance of P100,000 was issued by the supplier. The cost of uninstalling the old machine before installing the new unit was P10,000. 1. What amount of should be recorded as cost of the new machine?
Rizio Company purchases a machine for $10,600, terms 1/10, n/60, FOB shipping point. Rizio paid within the discount period and took the $106 discount. Transportation costs of $240 were paid by Rizio. The machine required mounting and power connections costing $733. Another $346 is paid to assemble the machine, and $40 of materials are used to get it into operation. During installation, the machine was damaged and $325 worth of repairs were made. Complete the below table to calculate the cost recorded for this machine.
Attractive Company sold a Ford Escape car costing P620,280 for P960,000 on August 1, 2021. A used car is accepted as a downpayment, P250,000 being allowed on the trade in and the balance is payable in 20 months plus 1% a month on diminishing balance starting August 31, 2021. The used car can be resold for P190,000 after reconditioning cost of P10,000. The company’s gross profit rate on the sale of used car is 15%. After making religious payments in 2021, the customer defaulted and the vehicle was repossessed on December 5, 2021. Toyota Motors estimated that the market value of the repossessed vehicle is P300,000 after reconditioning costs of P25,000. The gross profit rate of 15% is also applicable to repossessed cars. 1. How much is the balance of repossessed item? 2. How much is the net income in 2021?
A business has recently expanded its production capacity by installing some additional machinery. The associated costs were as follows: Cost of machinery £285,000 Delivery charges 27,000 Installation costs 25,000 Spare parts 68,000 Extended warranty 15,000 Import tax 21,000 The amount at which this machinery will be valued and shown in the Statement of Financial Position as its historical cost is: £285,000 £358,000 £380,000 £441,000
Rizio Company purchases a machine for $13,800, terms 2/10, n/60, FOB shipping point. Rizio paid within the discount period and took the $276 discount. Transportation costs of $312 were paid by Rizio. The machine required mounting and power connections costing $954. Another $450 is paid to assemble the machine, and $40 of materials are used to get it into operation. During installation, the machine was damaged and $285 worth of repairs were made.
DEF Company consigned 1,000 video players costing P900 per unit and retailing for P1,500 per unit to UUU on November 1, 2021. DEF paid P15,000 for the freight. For the month of November, the consignee sold 700 units. On December DEF ordered safety device on players which have not been sold. The cost of this alteration was: parts from inventories, P6,000 with a freight of P5,000. On December 20, DEF Company sent a mechanic to UUU to install safety devices on players. The cost of for labor, P5,000 which was paid by the consignee. DEF Company, thereafter, increased the unit retail price to P1,750 for the unsold players. On December 31, UUU remitted P1,021,750 to DEF Company in full settlement to date after deducting a commission of 15% of selling price on each player sold and P14,500 for delivering the players sold. Compute the consignment income to be reported by the consignor
DEF Company consigned 1,000 video players costing P900 per unit and retailing for P1,500 per unit to UUU on November 1, 2021. DEF paid P15,000 for the freight. For the month of November, the consignee sold 700 units. On December DEF ordered safety device on players which have not been sold. The cost of this alteration was: parts from inventories, P6,000 with a freight of P5,000. On December 20, DEF Company sent a mechanic to UU0 to install safety devices on players. The cost of for labor, P5,000 which was paid by the consignee. DEF Company, thereafter, increased the unit retail price to P1,750 for the unsold players. On December 31, UUU remitted P1,021,750 to DEF Company in full settlement to date after deducting a commission of 15% of selling price on each player sold and P14,500 for delivering the players sold. Compute the consignment income to be reported by the consignor
Wildhorse Co. purchased equipment on January 1 at a list price of $155000, with credit terms 3/10, n/30. Payment was made within the discount period. Wildhorse paid $6500 sales tax on the equipment, and paid installation charges of $2100. Prior to installation, Wildhorse paid $3500 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment?
Hh1. Southwest Milling Co. purchased a front-end loader to move stacks of lumber. The loader had a list price of $121,930. The seller agreed to allow a 5.25 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $2,320. Southwest Milling had to hire a specialist to calibrate the loader. The specialist’s fee was $1,220. The loader operator is paid an annual salary of $32,000. The cost of the company’s theft insurance policy increased