Queen Inc. purchased a machine on June 1 for $70000, paying cash. The company also paid $600 for freight, $1000 for installation and testing, $400 for employee training, $500 for supplies to be used in production, and $1800 for a one-year insurance policy. The machine has a residual value of $6000 and a useful life of 5 years. What is this machine's acquisition cost? A

Queen Inc. purchased a machine on June 1 for $70000, paying cash. The company also paid $600 for freight, $1000 for installation and testing, $400 for employee training, $500 for supplies to be used in production, and $1800 for a one-year insurance policy. The machine has a residual value of $6000 and a useful life of 5 years. What is this machine's acquisition cost? A

Name: Please do not Give image format Queen Inc. purchased a machine on June
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: Please do not Give image format Queen Inc. purchased a machine on June 1 for $70000, paying cash. The companyalso paid $600 for freight, $1000 for installation and testing, $400 for employeetraining, $500 for supplies to be used in production, and $1

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 6RE

See similar textbooks

Similar questions

Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for 1,500 each. The company uses group depreciation on a straight-line basis. Required: 1. Prepare journal entries to record the acquisition and the first years depreciation expense. 2. If one of the cars is sold at the beginning of the second year for 7,000, what journal entry is required?
Utica Machinery Company purchases an asset for 1,200,000. After the machine has been used for 25,000 hours, the company expects to sell the asset for 150,000. What is the depreciation rate per hour based on activity?
Don Company has recently purchased a computer system for its office. The following information was gathered in relation to the acquisition of the unit: List price- P304,000 Trade discount and rebates taken- P112,000 Installation and assembly cost- P6,400 Initial delivery and handling cost- P12,800 Purchase discount- 2% What is the acquisition cost of the new computer?
On January 2, 2000, the Ajax Plumbing Corporation purchases an automatic soldering machine for $18,000. The Corporation plans to transfer the machine to a subsidiary at the end of 2005 for $11,000. Determine the life of the machine so that the book value at the end 2005 will be $11,000, if the salvage value after L years should be $4,000 using:a. SLMb. DDBM
On 1 November 2018, Graceville Ltd purchased an item of property, plant and equipment for $50 000. The terms of the purchase were as follows: $50 000 could be paid within 30 days, or $65 000 in one year’s time. The management of Graceville opted to pay $65 000 in one year’s time. Delivery and handling costs of $4 000 were incurred, as well as engineering fees of $1 200 to ensure that the asset was correctly installed. The asset began operations on 6 January 2019. During January, holding costs of $5 000 were incurred because the asset was operating at less than full capacity. In addition, $900 costs comprising labour and small parts were incurred in day-to-day servicing of the asset. Management of Graceville Ltd uses the revaluation model to account for the asset. Required Prepare any necessary general journal entry(ies) to initially record and measure the asset in accordance with the requirements of AASB 116 ‘Property, Plant and Equipment’.
During the current year, Benguet Company purchased a secondhand machine at a price of P300,000. A cash down payment of P50,000 was made and a two-year, non interest bearing note was issued for the balance. Recent transactions involving similar machinery indicate that the used machine has a secondhand market value of P240,000. A new machine would cost P400,000. The following costs were incurred on the machine during the year: Cost of removing the old machine 2,000Cash proceeds form the sale of the old machine 1,200Cost of spare parts purchased and set aside from breakdowns during the first two years of normal use of the machine 20,000Cost of labor to install the machine 4,000Cost of testing the machine prior to use 1,800Cost of hauling the machine from the vendor’s place of business to the company’s premises 5,000Cost of repairing the damage to the machine when it was dropped during the installation 3,000Repairs incurred during the first year of operations 6,000Safety devices added to…
Abby Corporation acquired a new processing machine. Details of the acquisition are as follows: Invoice cost, terms, 5% discount if payment is made in 30 days. The company did pay within the discount period, P300,000, Cost of transporting the machine to the corporation's factory, P5,000. Cost of installation (which includes additional P2,000 incurred due to negligence of the workers), P11,000. The corporation's chief engineer spent one-fourth of his time during trial runs of the new machine, his monthly salary is P22,000. The company paid P1,000 for removing the old machine. (The old machine was sold for less than its book value.) At what amount should Abby Corporation capitalize the new processing machine?
On January 1, 20X1, Beard Company purchased a machine for $620,000. The machine is expected to have a 10-year life, with no salvage value, and will be depreciated by the straight-line method. On January 1, 20X1, it leased the machine to Child Company for a three-year period at an annual rental of $128,000 to be paid at the end of each year. Beard could have sold the machine for $817,298 instead of leasing it. Child does not know the implicit rate in the lease, but it has an incremental rate of 9%. Child Company has a December 31 reporting year. Use tables (PV of 1, PVAD of 1, and PVOA of 1) (Use the appropriate factor(s) from the tables provided. Round your intermediate calculations and final answers to the nearest whole dollar amount.) Required: Why is this an operating lease for Child Company? What are the amounts of the right-of-use asset and lease liability that Child Company should report on its balance sheet at December 31, 20X1? How much lease expense should Child Company…
On January 1, 20X1, Beard Company purchased a machine for $620,000. The machine is expected to have a 10-year life, with no salvage value, and will be depreciated by the straight-line method. On January 1, 20X1, it leased the machine to Child Company for a three-year period at an annual rental of $128,000 to be paid at the end of each year. Beard could have sold the machine for $817,298 instead of leasing it. Child does not know the implicit rate in the lease, but it has an incremental rate of 9%. Child Company has a December 31 reporting year. Required: Why is this an operating lease for Child Company? What are the amounts of the right-of-use asset and lease liability that Child Company should report on its balance sheet at December 31, 20X1? How much lease expense should Child Company recognize in 20X1?
On January 1. Year1, Company purchased a machine for $200,000. Company paid $50,000 as a down-payment and borrowed the other $150,000. Company paid interest of $2,000 on the loan during year 1. Company paid shipping costs of $4,000 and installation costs of $10,000. What will be the acquisition cost of the machine?
The Fisher Company purchased a machine on October 1, 2018, for $18,000. At the time of acquisition, the machine was estimated to have a useful kufe if five years and an estimated salvage of $5,000. Fisher has recorded monthly depreciation using the straigh-line method. On April 1, 2020, the machine was sold for $50,000. What should be the loss recognized from the sale of the machine? a. $0 b. $2,500 c. $5,000 d. $7,500
The invoice price of a machine is $50,000. Various other costs relating to the acquisition and installation of the machine including transportation, electrical wiring, special base, and so on amount to $7,500. The machine has an estimated life of 10 years, with no residual value at the end of that period.The owner of the business suggests that the incidental costs of $7,500 be charged to expense immediately for the following reasons.1. If the machine should be sold, these costs cannot be recovered in the sales price.2. The inclusion of the $7,500 in the machinery account on the books will not necessarily result in a closer approximation of the market price of this asset over the years, because of the possibility of changing demand and supply levels.3. Charging the $7,500 to expense immediately will reduce federal income taxes.Discuss each of the points raised by the owner of the business.