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Jada Company had the following transactions during the year: • Purchased a machine for $500,000 using a long-term note to finance it • Paid $500 for ordinary repair • Purchased a patent for $45,000 cash • Paid $200,000 cash for addition to an existing building • Paid $60,000 for monthly salaries • Paid $250 for routine maintenance on equipment • Paid $10,000 for extraordinary repairs If all transactions were recorded properly, what amount did Jada capitalize for the year, and what amount did Jada expense for the year?

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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 11, Problem 2EA
Textbook Problem
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Jada Company had the following transactions during the year:

• Purchased a machine for $500,000 using a long-term note to finance it

• Paid $500 for ordinary repair

• Purchased a patent for $45,000 cash

• Paid $200,000 cash for addition to an existing building

• Paid $60,000 for monthly salaries

• Paid $250 for routine maintenance on equipment

• Paid $10,000 for extraordinary repairs

If all transactions were recorded properly, what amount did Jada capitalize for the year, and what amount did Jada expense for the year?

To determine

To compute:

The value of capitalize and expenses for the year by Company J.

Introduction:

When the cost is incurred to increase the value and the life of an asset, then it needs to be capitalized in the books of accounts and shown in the balance sheet and is depreciated over the years.

Explanation of Solution

Calculation of capitalized value for the year by Company J:

Particulars Amount($)
Machinery purchased for using a long-term note 500,000
Add: Purchased a patent 45,000
Paid cash for addition to an existing building 200,000
Paid cash for extraordinary repairs 10,000
Total capitalized value 755,000

Table (1)

Therefore, the capitalized value for the year by Company J is $755,000...

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Chapter 11 Solutions

Principles of Accounting Volume 1
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