Fundamental Accounting Principles
24th Edition
ISBN: 9781259916960
Author: Wild, John J., Shaw, Ken W.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 10, Problem 2QS
Assigning costs to plant assets C1 Q
Listed below are costs (or discounts) to purchase or construct new plant assets. (1) Indicate whether the costs should be expensed or capitalized (meaning they are included in the cost of the plant assets on the balance sheet). (2) For costs that should be capitalized, indicate in which category of plant assets (Equipment, Building, or Land) the related costs should be recorded on the balance sheet.
Expensed or Asset
Capitalized Category
_ _ 1. Wages paid to train employees to use new equipment.
_ _ 2. Invoice cost paid for new equipment,
_ _ 3. Early payment discount taken on the purchase of new equipment.
_ _ 4. Realtor commissions incurred on land purchased.
_ _ 5. Property taxes on land incurred after it was purchased,
_ _ 6. Costs of oil for the truck used to deliver new equipment.
_ _ 7. Costs to lay foundation for a new building.
_ _ 8. Insurance on a new building during its construction.
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Q3) (Classification Issues—intangibles) Presented below and on the next page is a list of that could be included in the intangible assets section of the statement of financial position.
Investment in a subsidiary company.
Timberland,
Cost of engineering activity required 10 advance the design of product to the manufacturing stage.
Cost of searching for applications of new research findings.
Costs incurred in the formation of a corporation.
Training costs incurred in start-up of new operation.
Purchase cost of a franchise.
Goodwill generated internally
Cost of testing in search for product alternatives.
Goodwill acquired in the purchase of a business.
Cost of developing a patent (before achieving economic viability).
Cost of purchasing a patent from an inventor.
Legal costs incurred in securing a patent.
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Cost of conceptual formulation of possible product alternatives.
Cost of purchasing a copyright.
Development costs…
answer in 10 minutes
What is the criterion a company uses to decide whether to include an expenditure in the cost of property, plant,and equipment rather than expensing it? Give an example of the types of expenditures that are included in the cost of property, plant and equipment as a result of the application of this criterion
Which of the following is considered capital expenditure
Select one:
a. Research expenses.
b. Purchase of office consumables.
c. Cost of material to construct new plant.
d. Staff overtime.
Chapter 10 Solutions
Fundamental Accounting Principles
Ch. 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. 10DQ
Ch. 10 - Prob. 11DQCh. 10 - Prob. 12DQCh. 10 - Prob. 13DQCh. 10 - Prob. 14DQCh. 10 - Prob. 15DQCh. 10 - Prob. 16DQCh. 10 - Prob. 17DQCh. 10 - Prob. 18DQCh. 10 - Prob. 19DQCh. 10 - Prob. 20DQCh. 10 - Cost of plant assets C1 Kegler Bowling installs...Ch. 10 - Assigning costs to plant assets C1 Q Listed below...Ch. 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. 6QSCh. 10 - Prob. 7QSCh. 10 - Prob. 8QSCh. 10 - Revenue and capital expenditures C3 1. Classify...Ch. 10 - Prob. 10QSCh. 10 - Natural resources and depletion P3 Perez Company...Ch. 10 - Prob. 12QSCh. 10 - Prob. 13QSCh. 10 - Prob. 14QSCh. 10 - Prob. 15QSCh. 10 - Prob. 16QSCh. 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 - 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 - Prob. 8APSACh. 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. 4BPSBCh. 10 - Problem 10-5B Computing and revising...Ch. 10 - Problem 1O-6B
Disposal of plant assets
C1 P1 P2
On...Ch. 10 - Prob. 7BPSBCh. 10 - Prob. 8BPSBCh. 10 - Prob. 10SPCh. 10 - Prob. 1AACh. 10 - Prob. 2AACh. 10 - Prob. 3AACh. 10 - Prob. 1BTNCh. 10 - Prob. 2BTNCh. 10 - Prob. 3BTNCh. 10 - Prob. 4BTNCh. 10 - Prob. 5BTNCh. 10 - Prob. 6BTN
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Property Plant Equipment will be classified at year end at what amount? "Apply PAS 36" Historical Cost Cost Lower of Cost or Net Realizable Value Carrying Valuearrow_forwardQ3) The following is a list that can be included in the intangible assets section of the statement of financial position: Investment in a subsidiary company. Timberland, Cost of engineering activity required 10 advance the design of product to the manufacturing stage. Cost of searching for applications of new research findings. Costs incurred in the formation of a corporation. Training costs incurred in start-up of new operation. Purchase cost of a franchise. Goodwill generated internally Cost of testing in search for product alternatives. Goodwill acquired in the purchase of a business. Cost of developing a patent (before achieving economic viability). Cost of purchasing a patent from an inventor. Legal costs incurred in securing a patent. Unrecovered costs of a successful legal suit to protect the patent, Cost of conceptual formulation of possible product alternatives. Cost of purchasing a copyright. Development costs incurred after achieving economic viability. Long-term…arrow_forwardDepreciation of a plant asset is the process of ________. A. asset valuation for statement of financial position purposes B. allocation of the assets cost to the periods of use C. fund accumulation for the replacement of the asset D. asset valuation based on current replacement cost dataarrow_forward
- Cost includes all costs necessary to bring the asset to a working condition for its intended use. Which of these costs are taken as a part of cost of assets? I. Invoice price II. Transportation cost III. Installation charges I and II II and III I, II and III I and IIIarrow_forwardEXERCISE 11–1 Indicate whether the items below are to be capitalized as an intangible asset or expensed. Which account(s) would each item be recorded to? Salaries of research staff Costs to test prototypes Borrowing costs for development of a qualifying intangible asset Executive salaries for time spent on development of an intangible asset Costs to launch a new product Purchase cost of a patent from a third party Product research costs Costs internally incurred to create goodwill Legal costs to successfully defend a patent Purchase price of new software Training costs for new software Direct costs of special programming needed when purchasing new software Costs incurred in forming a corporation for purposes of commercializing a new product Operating losses incurred in the start-up of a business to manufacture a patented produce The purchase cost of a franchise The cost of developing a patent The cost of purchasing a patent from an inventor Legal costs incurred in securing a patent…arrow_forwardThe critical issues in accounting for tangible assets are recognising cost incurred as an expense or an asset and the measurement of initial costs and subsequent expenditure. MFRS 116 Property, Plant and Equipment provide guidance on these critical issues. Please give explanation in details and examplearrow_forward
- Which statement is INCORRECT about subsequent measurement of intangible assets? Q7 Select one: a. When using the cost model an entity should estimate the estimated useful life as well as the estimated residual value if the asset is determined to have an indefinite useful life b. When using the cost model an entity should estimate the estimated useful life as well as the estimated residual value if the asset is determined to have a definite useful life. c. The same model chosen by an entity should be used for all intangible assets in the same class. d. Intangible assets may be measured using either the cost model or the revalued cost model.arrow_forwardProperty, Plant, and Equipment (PPE) Assessment:a) Describe the company’s Property, Plant and Equipment section in the balance sheet relative to the total fixed assets of the company’s industry (use quantitative and qualitative summaries to support your description. b) Analyze the accounting treatment of Property, Plant and Equipment, including depreciation methods employed and any impairments recognized, and include a brief summary of the accounting standards and principles included in the decision (reference the Notes that inform your summary). c) Discuss the significance of Property, Plant And Equipment in the company’s operations and its impact on financial performance and reporting.arrow_forwardChapter 8 Why are the costs of plant/long term assets recovered through depreciation vs. expensed out during the period purchased? Choose one of the following depreciation methods to discuss: straight line, units of production, declining balance. Share how depreciation using this method is calculated and provide an example of when this would be the most ideal method for application.arrow_forward
- 1 The cost of fixed assets is distributed over the asset's estimated lifetime. This spreading of costs over the periods which receives benefit is known as Question 1 options: Useful life Depreciation Salvage value Units of productionarrow_forwardThe book value of a plant asset is the difference between the Question 20 options: replacement cost of the asset and its historical cost. cost of the asset and the amount of depreciation expense for the year. cost of the asset and the accumulated depreciation to date. proceeds received from the sale of the asset and its original cost.arrow_forwardStatement 1: When an item of asset is transferred to and from the classification investment property, carried using the cost model, the measurement basis at the date of transfer is the original cost.Statement 2: Any gain or loss from the disposal of the investment property shall be determined as the difference between the net disposal proceeds and the carrying amount of the asset and shall be recognized in profit or lossStatement 3: If owner-occupied property is transferred to investment property that is to be carried at fair value, the difference between the carrying amount of the property and its fair value shall be included in profit or loss.Statement 4: If an entity determines that the fair value of an investment property is not reliably determinable on a continuing basis, the entity shall measure that investment property using the revaluation model. A. Only two of the statements are true. B. All statements are true. C. Only one of the statements is true. D. Only three…arrow_forward
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