Accounting (Text Only)
26th Edition
ISBN: 9781285743615
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 2DQ
To determine
Fixed Assets: It refers to the long-term assets having a useful life of more than a year which is, acquired by a company to be used in its business activities, for generating revenue. Examples of fixed assets are Plant, Property, Equipment, Land, and Buildings.
To name: the account head for listing the vacant lot in the balance sheet by Company B.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
A. blue ocean associate is looking to generate income from extra cash. The company purchased an old building, will be restored and sold at a profit. how should blue ocean classify the building on its book?
B. And if blue ocean had bought a lanf for the site of a new office, what depreciation method would you, as its newly hired accountant, suggest it uses for the land?
Ahmed Company bought piece of land and decided to sell it in the future at a profit as the value of the land will increase. In which financial statement this land should be reported and which part specifically? Do we need to record depreciation on land
1. Bullwinkle Co. acquired an adjacent vacant lot with the hope of selling it in the future at a gain. The lot is not intended to be used in Bullwinkle's business operations. Where should such real estate be listed on the balance sheet?
2. Distinguish between the accounting for capital expenditures and revenue expenditures.
3. Immediately after a used truck is acquired, a new motor is installed at a total cost of $3,850. Is this a capital expenditure or a revenue expenditure?
4. Keyser Company purchased a machine that has a manufacturer's suggested life of 20 years. The company plans to use the machine on a special project that will last 12 years. At the completion of the project, the machine will be sold. Over how many years should the machine be depreciated?
5. Is it necessary for a business to use the same method of computing depreciation
for all classes of its depreciable assets and
for financial statement purposes and in determining income taxes?
Chapter 10 Solutions
Accounting (Text Only)
Ch. 10 - ONeil Office Supplies has a fleet of automobiles...Ch. 10 - Prob. 2DQCh. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Immediately after a used truck is acquired, a new...Ch. 10 - Keyser Company purchased a machine that has a...Ch. 10 - Is it necessary for a business to use the same...Ch. 10 - Prob. 8DQCh. 10 - For some of the fixed assets of a business, the...Ch. 10 - a. Over what period of time should the cost of a...
Ch. 10 - Straight-line depreciation A building acquired at...Ch. 10 - Straight-line depreciation Equipment acquired at...Ch. 10 - Units-of-activity depreciation A truck acquired at...Ch. 10 - Units-of-activity depreciation A tractor acquired...Ch. 10 - Double declining-balance depreciation A building...Ch. 10 - Double-declining-balance depreciation Equipment...Ch. 10 - Revision of depreciation Equipment with a cost of...Ch. 10 - Revision of depreciation A truck with a cost of...Ch. 10 - Capital and revenue expenditures On February 14,...Ch. 10 - Capital and revenue expenditures On August 7,...Ch. 10 - Sale of equipment Equipment was acquired at the...Ch. 10 - Sale of equipment Equipment was acquired at the...Ch. 10 - Prob. 10.7BPECh. 10 - Prob. 10.7APECh. 10 - Prob. 10.8BPECh. 10 - Prob. 10.8APECh. 10 - Prob. 10.9APECh. 10 - Prob. 10.9BPECh. 10 - Costs of acquiring fixed assets Melinda Stoffers...Ch. 10 - Prob. 10.2EXCh. 10 - Determining cost of land Northwest Delivery...Ch. 10 - Prob. 10.4EXCh. 10 - Prob. 10.5EXCh. 10 - Capital and revenue expenditures Quality Move...Ch. 10 - Nature of depreciation Tri-City Ironworks Co....Ch. 10 - Prob. 10.8EXCh. 10 - Prob. 10.9EXCh. 10 - Prob. 10.10EXCh. 10 - Depreciation by units-of-output method Prior to...Ch. 10 - Depreciation by two methods A John Deere tractor...Ch. 10 - Depreciation by two methods A storage tank...Ch. 10 - Partial-year depreciation Sandblasting equipment...Ch. 10 - Revision of depreciation A building with a cost of...Ch. 10 - Capital expenditure and depreciation; parital-year...Ch. 10 - Entries for sale of fixed asset Equipment acquired...Ch. 10 - Prob. 10.18EXCh. 10 - Depletion entries Big Sky Mining Co. acquired...Ch. 10 - Prob. 10.20EXCh. 10 - Book value of fixed assets Apple Inc. designs,...Ch. 10 - Balance sheet presentation List the errors you...Ch. 10 - Prob. 10.24EXCh. 10 - Prob. 10.23EXCh. 10 - Asset traded for similar asset A printing press...Ch. 10 - Prob. 10.26EXCh. 10 - Entries for trade of fixed asset On July 1, Twin...Ch. 10 - Entries for trade of fixed asset On October 1,...Ch. 10 - Allocating payments and receipts to fixed asset...Ch. 10 - Comparing three depreciation methods Montes Coffee...Ch. 10 - Depreciation by three methods; partial years...Ch. 10 - Prob. 10.4APRCh. 10 - Transactions for fixed assets, including sale The...Ch. 10 - Amortization and depletion entries Data related to...Ch. 10 - Allocating payments and receipts to fixed asset...Ch. 10 - Comparing three depreciation methods Waylander...Ch. 10 - Depreciation by three methods; partial years...Ch. 10 - Depreciation by two methods; sale of fixed asset...Ch. 10 - Transactions for fixed assets, including sale The...Ch. 10 - Amortization and depletion entries Data related to...Ch. 10 - Prob. 10.1CPCh. 10 - Prob. 10.2CPCh. 10 - Effect of depreciation on net income Tuttle...Ch. 10 - Fixed asset turnover: three industries The...
Knowledge Booster
Similar questions
- During the current year, Alanna Co. had the following transactions pertaining to its new office building. A. What should Alanna Co. record on its books for the land? The total cost of land includes all costs of preparing the land for use. The demolition cost of the old building is added to the land costs, and the sale of the old building scrap is subtracted from the land cost. B. What should Alanna Co. record on its books for the building?arrow_forwardSmatter Corporation purchased land for a new building. Which of the following costswould not be included in the cost of the land?a. Purchase price of the landb. Cost of demolishing an old garage located on the landc. Cost of a new parking lot constructed on the landd. Brokerage commission paid to the real estate agent who handled the land transactionarrow_forwardBellow are elements in the financial statements on which the director of ABC Building Limited require advice: • In 2016, ABC Building Limited acquired several properties as investment properties. Since ABC has not adopted accounting policy in accounting for property as investment properties before, the financial director considered such adoption is change in accounting policy. ABC Building Limited has no investment property before 2016. • In 2018, ABC Building Limited proposed to change to the cost model instead of fair value model in accounting for its investment property in accordance with PSAK 13. Its financial director considered whether ABC could make such changes and, if change could be made, how ABC should account for the changes • In 2020, ABC Building limited decided to make a change in estimate as to the duration of depreciation of its building, increasing it from 20 to 30 years. Please Discuss how the above items should be dealt with in the financial statements of ABC…arrow_forward
- During the current year, Alanna Co. had the following transactions pertaining to its new office building. What should Alanna Co. record on its books for the land? The total cost of land includes all costs of preparing the land for use. The demolition cost of the old building is added to the land costs, and the sale of the old building scrap is subtracted from the land cost. What should Alanna Co. record on its books for the building?arrow_forwardCarver Inc. purchased a building and the land on which the building is situated for a total cost of $922,800 cash. The land was appraised at $244,081 and the building at $817,139. What is the accounting term for this type of acquisition? Determine the amount of the purchase cost to allocate to the land and the amount to allocate to the building. Would the company recognize a gain on the purchase? Record the purchase in a horizontal statements model.arrow_forwardBelow are elements in the financial statements on which the director of ABC Building Limited require advice: • In 2016, ABC Building Limited acquired several properties as investment properties. Since ABC has not adopted accounting policy in accounting for property as investment properties before, the financial director considered such adoption is change in accounting policy. ABC Building Limited has no investment property before 2016. • In 2018, ABC Building Limited proposed to change to the cost model instead of fair value model in accounting for its investment property in accordance with PSAK 13. Its financial director considered whether ABC could make such changes and, if change could be made, how ABC should account for the changes • In 2020, ABC Building limited decided to make a change in estimate as to the duration of depreciation of its building, increasing it from 20 to 30 years. Please discuss how the above items should be dealt with in the financial statements of ABC…arrow_forward
- The Cost Principle, is an important measurement principle which is used in accounting. Describe the cost principle and discuss what happens if an asset like land has an increase in the fair value. How would the company report the land? Describe the fair value principle and for what types of assets is the fair value principle used. Which measurement principle (cost or fair value) do companies use to record most assets? Example question: Eve Myles Travel Agency purchased land for $90,000 cash on December 1, 2012. On December 31, 2012, the land's value had increased to $95,000. What amount should be reported for land on Eve's balance sheet on December 31, 2012?arrow_forwardDonner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value of the land to be $221,567. Focus Company initially offered to buy the land for $181,076. The companies settled on a purchase price of $209,946. On the same day, another piece of land on the same block sold for $231,997. Under the cost concept, at what amount should the land be recorded in the accounting records of Focus Company? Oa. $221,567 Ob. $231,997 Oc. $209,946 Od. $181,076arrow_forwardOn December 31, 20x1, ABC Co. has no intention of selling a land classified as investment property measured at cost. However, on Jan. 2, 20x2, because of an unanticipated opportunity, ABC Co. sold the b ' at a very high profit. How should ABC Co. classify the land in its December 31, 20x1 statement of financial position? A. As held for sale asset measured at the sale price on January 2,20x; B. The land shall not be included in the December 31, 20x1 statement of financial position because it is already considered sold. C. As investment property measured at cost. D. As investment property measured at the sale price on January 20x2.arrow_forward
- Explain whether the following transaction would give rise to a capital gain charge: (a) Winnings from legal gambling (b) Gains on the disposal of copyright for a play by the Institute of Culture. (c) Gains arising from damages to a warehouse building that contained goods for resale. The damage was so severe the building had to be demolished. A large sum of insurance proceeds was received. (d) Gains on the disposal of shares in an unlisted company. (e) Gain on disposal of an antique piece of furniture. give a reason for answerarrow_forwardDonner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value of the land to be $218,252. Focus Company initially offered to buy the land for $179,248. The companies settled on a purchase price of $207,236. On the same day, another piece of land on the same block sold for $231,763. Under the cost concept, at what amount should the land be recorded in the accounting records of Focus Companyarrow_forwardExplain whether the following transaction would give rise to a capital gain charge: (a) Winnings from legal gambling (b) Gains on the disposal of copyright for a play by the Institute of Culture. (c) Gains arising from damages to a warehouse building that contained goods for resale. The damage was so severe the building had to be demolished. A large sum of insurance proceeds was received. (d) Gains on the disposal of shares in an unlisted company. (e) Gain on disposal of an antique piece of furniture. Be sure to give the reason for your answerarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College