FUND ACCOUNTING PRINCIPLES CONNECT
25th Edition
ISBN: 9781265342395
Author: Wild
Publisher: MCG
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Chapter 10, Problem 15QS
To determine
Concept Introduction: Lease improvements are modifications to the leased property so that the property meets the requirements of the tenant. Accounting for lease improvements is similar to accounting for fixed assets, the cost of improvements is reported at cost and
The
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Recording Asset Retirement Obligation
BPP Company maintains underground storage tanks for its operations. A new storage tank was installed and made ready for use at a cost of $2,000,000 on January 1 of the current year. The tank's useful life is estimated at 15 years, at which time the company is legally required to remove the tank and restore the area at an estimated cost of $200,000. The appropriate discount rate for the
company is 12%.
Required
a. On January 1, record the entry for (1) the purchase and installation of the storage tank and (2) the related asset retirement obligation.
b. Record adjusting entries on December 31 of the current year for (1) depreciation and (2) accretion.
c. Assume that on December 31, fifteen years later, the tank is safely removed at a cost of $230,000. Record the required journal entry.
Note: Round answers to the nearest whole dollar.
a. 1. Jan. 1
a. 2. Jan. 1
b. 1. Dec. 31
b. 2. Dec. 31
c. Dec. 31, Year 15
Account Name
To record purchase of storage…
Recording Asset Retirement Obligation
BPP Company maintains underground storage tanks for its operations. A new storage tank was installed and made ready for use at a cost of
$2,000,000 on January 1 of the current year. The tank's useful life is estimated at 15 years, at which time the company is legally required to
remove the tank and restore the area at an estimated cost of $200,000. The appropriate discount rate for the company is 12%.
Required
a. On January 1, record the entry for (1) the purchase and installation of the storage tank and (2) the related asset retirement obligation.
b. Record adjusting entries on December 31 of the current year for (1) depreciation and (2) accretion.
c. Assume that on December 31, fifteen years later, the tank is safely removed at a cost of $230,000. Record the required journal entry.
Note: Round answers to the nearest whole dollar.
a. 1. Jan. 1
a. 2. Jan. 1
b. 1. Dec. 31
M
b. 2. Dec. 31
Account Name
Equipment
Cash
To record purchase of storage tank…
Exercise 10-26 (Algo) Research and development [LO10-8]
In 2021, Space Technology Company modified its model Z2 satellite to incorporate a new communication device. The company made
the following expenditures:
Basic research to develop the technology
Engineering design work
Development of a prototype device
Acquisition of equipment
Testing and modification of the prototype
Legal and other fees for patent application on the new communication system
Legal fees for successful defense of the new patent
$2,700,000
820,000
440,000
74,000
340,000
54,000
34,000
$4,462,000
Total
The equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $24,000.
During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above as
costs of the patent. Management contends that the device simply represents an improvement of the existing communication system of
the satellite and, therefore, should be…
Chapter 10 Solutions
FUND ACCOUNTING PRINCIPLES CONNECT
Ch. 10 - Cost of plant assets C1 Kegler Bowling installs...Ch. 10 - Assigning costs to plant assets C1 Q Listed below...Ch. 10 - Prob. 3QSCh. 10 - Straight-line depreciation P1 On January 1= the...Ch. 10 - QS 10-' Units-of-production depreciation
On...Ch. 10 - QS10-5 Double-declining-balance method P1
A...Ch. 10 - Prob. 7QSCh. 10 - Prob. 8QSCh. 10 - Prob. 9QSCh. 10 - Prob. 10QS
Ch. 10 - Prob. 11QSCh. 10 - Prob. 12QSCh. 10 - Prob. 13QSCh. 10 - Prob. 14QSCh. 10 - Prob. 15QSCh. 10 - Prob. 16QSCh. 10 - Prob. 17QSCh. 10 - Prob. 18QSCh. 10 - Prob. 19QSCh. 10 - Prob. 20QSCh. 10 - Prob. 21QSCh. 10 - Prob. 22QSCh. 10 - Exercise 10-1 Cost of plant assets C1 Q Rizio Co....Ch. 10 - Prob. 2ECh. 10 - Prob. 3ECh. 10 - Exercise 104 Straight-line depreciation P1 Ramirez...Ch. 10 - Exercise 10-5 Units-of-production depreciation P1...Ch. 10 - Exercise 10-6
Double-declining-balance...Ch. 10 - Exercise 10-7 Straight-line depreciation P1
New...Ch. 10 - Exercise 10-8 Double-declining-balance...Ch. 10 - Exercise 10-9 Straight-line depreciation and...Ch. 10 - Exercise 10-10
Double-declining-balance...Ch. 10 - Exercise 10-11 Straight-line, partial-year...Ch. 10 - Exercise 10-12 Dauble-declining-balance....Ch. 10 - Exercise 10-13
Revising depreciation
C2
Apex...Ch. 10 - Exercise 10-14 Ordinary repairs, extraordinary...Ch. 10 - Exercise 10.15 Extraordinary repairs; plant asset...Ch. 10 - Exercise 10-16 Disposal of assets P2 Diaz Company...Ch. 10 - Exercise 10-17 Partial-year depreciation: disposal...Ch. 10 - Exercise 10-18 Depletion of natural resources P3...Ch. 10 - Exercise 10-19 Amortization of intangible assets...Ch. 10 - Exercise 10-20 Goodwill P4 Robinson Company...Ch. 10 - Exercise 10-21 Preparing a balance sheet P1 P3...Ch. 10 - Exercise 10-22 Evaluating efficient use of assets...Ch. 10 - Exercise 10-23A Exchanging assets P5
Gilly...Ch. 10 - Prob. 24ECh. 10 - Prob. 25ECh. 10 - Prob. 26ECh. 10 - Problem 10-1A Plant asset costs; depreciation...Ch. 10 - Problem 1O-2A Depreciation methods P1 A machine...Ch. 10 - Problem 10-3A Asset cost allocation; straight-line...Ch. 10 - Problem 10-4A
Computing and revising depreciation;...Ch. 10 - Problem 10-5A Computing and revising depreciation;...Ch. 10 - Problem 1O-6A
Disposal of plant assets
C1 P1...Ch. 10 - Problem 1O7A
Natural resources
P3
On July 23 of...Ch. 10 - Problem 10-1B Plant asset costs; depreciation...Ch. 10 - Problem 10-28 Depreciation methods P1 On January...Ch. 10 - Problem 10-3B Asset cost allocation; straight-line...Ch. 10 - Prob. 4PSBCh. 10 - Problem 10-5B Computing and revising...Ch. 10 - Problem 1O-6B
Disposal of plant assets
C1 P1 P2
On...Ch. 10 - Prob. 7PSBCh. 10 - Prob. 10SPCh. 10 - Prob. 1AACh. 10 - Prob. 2AACh. 10 - Prob. 3AACh. 10 - Prob. 1DQCh. 10 - Prob. 2DQCh. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - Prob. 10DQCh. 10 - Prob. 11DQCh. 10 - Prob. 12DQCh. 10 - Prob. 13DQCh. 10 - Prob. 14DQCh. 10 - Prob. 15DQCh. 10 - Prob. 16DQCh. 10 - Prob. 1BTNCh. 10 - Prob. 2BTNCh. 10 - Prob. 3BTNCh. 10 - Prob. 4BTN
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