System 2 - 100,000 System 1 First cost, $ - 50,000 AOC, $ per year Salvage value, $ Rework at midlife, $ -6,000 -1,500 30,000 -17,000 - 30,000 Life, years 4 12
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Determine if the selection of system 1 or 2 is sensitive to variation in the return required by management. The corporate MARR ranges from 8% to
16% per year on different projects. Use tabulated factors or a spreadsheet, as requested by your instructor.
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- Q1) A company has the following accounts’ balances at the end of the year: Building (Net) 20 year life left $ 4,000,000. The replacement cost for the Building is 4,500,000 USD. Inventory 40,000 unit at $20 each with a replacement cost $22. And cost of goods sold of $500,000 with a replacement cost of 520,000. Required: Indicate how the above information would affect the financial statements of the company when adopting the current cost accounting model. You need to determine the realized and unrealized profit.N3. Account A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $75,000 with $3,500 salvage value after 16 years. The other can be purchased and installed for $105,000 with $5,000 salvage value after 16 years. Operation and maintenance for each is expected to be $17,000 and $15,500 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 25%, and has a MARR of 9% after taxes. What must the cost of the second (more expensive) conveyor be for there to be no economic advantage between the two?Question 5The following balances were extracted from the books of Billion Precision for the yearended 31 December 2020.Dr (RM) Cr (RM)Land 500,000Building 200,000Motor vehicles 120,000Plant and machinery 70,000Profit b/f as at 01.01.2020 237,650Capital 438,000Acc depreciation as at 1.1.2020 :-Building 60,000-Motor Vehicles 69,250-Plant & Machinery 40,000Returns 3,600 4,100Revenue 800,000Purchases 400,000Discounts 5,0006Carriage inwards 7,700Opening inventory 52,000Provision for bad debts 2,000Trade receivables / Trade payable 66,000 43,200Advertising 18,000Staff training cost 4,000Bad debts 12,500Motor expenses 27,000Rental 90,000Bank 7,600Wages and salaries 126,0001,701,800 1,701,800Additional information:i.i. The provision for bad debts should be 4% of trade receivables.ii. Depreciation is to be charged as follows:-Buildings 2% on cost.-Plant and machinery 20% on cost.-Vehicles 25% on cost.iii. The closing inventories is valued at RM57,000.Required:a. Prepare the Statement of…
- New Office Equipment List price: $60,000; terms: 2/10, n/30; paid within the discount period. Transportation-in: $1,500. Installation: $2,500. Cost to repair damage during unloading: $650. Routine maintenance cost after eight months: $350. determine the amount of cost to be capitalized in the asset account office equipment: ?QUESTION 1The following trial balance relates to Golden Ltd at 30th September 2018 GHS'000 GHS'000Sales (a) 760,000Material purchases (b) 128,000Production labour (b) 248,000Factory overheads (b) 160,000Distribution costs 28,400Administrative expenses (c) 92,800Finance costs 700Investment income 1,600Leased property - at cost (b) 100,000Plant and equipment - at cost (b) 89,000Accumulated amortisation/depreciation at 1/10/2017- leased property 20,000- plant and equipment…E 12-9 Research and Development Cost In 2019, Lalli Corporation incurred R&D costs as follow: Materials used from inventory 100,000 Personnel in R&D lab 100,000 Allocation of the cost of utilities and maintenance costs of the R&D facility 50,000 These costs relate to a product that will be marked in 2020. The company estimates tht these costs will be recouped by December 31, 2020. Required: 1. What is the amount of R&D cost expensed in 2019? 2. Would your answer change if the materials were purchased and not used or if the utilities and maintence costs were related to the corporate offices?
- P2-3A Total Manufacturing Cost. Income Statement, Unit Cost, and Selling Price Two inventors, recently organized as Innovation, Inc., consult you regaridng and planned new product. They have estimates of the costs of materials, labor, overhead, and other expenses for 2019 but need to know how much to chanrge for each unit to earn a profit in 2019 equal to 15% of their estimated total long-term investment of $400,000 (ignore income taxes). Their plans indicate that each unit of the new product requires the following: Direct materials 4 lbs. of a materials costing $5/lb. Direct labor 2 hrs. of a meter former's time at $11/hr. 0.6 hr. of an assembler's time at $8/hr. Major items of production overhead would be annual rent of $46,460 for a factory building, $28,660 rent for machinery, and $21,700 of indirect materials. Other production overhead is estimated to be…Find the Annual Recovery for Year 1. Method Purchased Cost Recovery Class Annual Recovery for Year 1 MACRS Nov 05 $12,000 3Communication Godwin Co. owns three delivery trucks. Details for each truck at the end of the most recent year follow: At the beginning of the year, a hydraulic lift is added to Truck 1 at a cost of 4,500. The addition of the hydraulic lift will allow the company to deliver much larger objects than could previously be delivered. At the beginning of the year, the engine of Truck 2 is overhauled at a cost of 5,000. The engine overhaul will extend the trucks useful life by three years. Write a short memo to Godwins chief financial officer explaining the financial statement effects of the expenditures associated with Trucks 1 and 2.
- Problem 6Four, Inc. provided the following balances at the end of the current year:Wasting asset, at cost P20,000,000Accumulated depletion 2,500,000Share capital 50,000,000Capital liquidated 1,800,000Retained earnings 1,500,000Depletion based on 50,000 units at P20 per unit 1,000,000Inventory of resource deposit 100,000Required:a. Compute the maximum dividend that can be declared.b. Prepare the journal entry to record the declaration of P2,000,000 dividend.unset Unlimited bought a machine for $71,000 cash. The estimated useful life was five years and the estimated residual value was $8,000. Assume that the estimated useful life in productive units is 159,000. Units actually produced were 42,400 in year 1 and 47,700 in year 2. Required: 1. Determine the appropriate amounts to complete the following schedule. 2-a. Which method would result in the lowest net income for year 1? 2-b. Which method would result in the lowest net income for year 2? 3. Which method would result in the lowest fixed asset turnover ratio for year 1?31-Dec-2020 31-Dec-2019 $ $ Equipment 177,000 100,000 Accumulated Depreciation $76,000 $60,000 A equipment with a cost of $20,000 was disposed during the year with accumulated depreciation of $15000 and gain on disposal of $3,000. No other disposal or retirement of Equipment during the year ended 31 December 2020. The total depreiciation expense for year ended 31 December 2020 is $ Additions of Equipment (Purchase of Equipment) for the year ended 31 December 2020 is $ Sales Proceeds on disposal of equipment is $