Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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Chapter 11, Problem 2TP
Speedy delivery service recently hired a new accountant who discovered that the prior accountant had erroneously capitalized routine repair and maintenance costs on delivery trucks. The costs were added to the overall trucks’ book values and
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John Smith mistakenly expensed the cost of a long-term tangible fixed asset. Specifically, he charged the cost of a truck to a delivery expense account. How will this error affect the income statement and the balance sheet in the year in which the mistake is made?
After a while, Brekdak as head of the Accounting Department, realized that the system of record that had been working for the last 2 years at PT. Suka Maju experienced a misstatement due to an error in adopting an estimate from the accounting records that turned into a straight-line method. With the changes of used in the depreciation estimation method, cause the company's performance to decline and how were errors found in the recording of the financial statement accounts.
Do you consider that the change of accounting policies that have been used for a long time is an inappropriate action to be implemented in the company? Explain your reasons and what the best way is if the policy (estimation, method, etc.) change does not have the potential to harm the company and other users of the report.
Explain what impact these errors would have hadover the last year and how you will correct them so you can prepare accurate financial statements.Expenditures:• Normal repair and maintenance on the manufacturing facility were capitalized.• The cost of taxes on new equipment used in business operations was expensed.• The shipping costs on new equipment used in business operations were expensed.• The cost of a minor repair on existing equipment used in business operations was capitalized.Assets:• Land next to the production facility held for use next year as a place to build a warehouse wasdepreciated.• Land held for future resale when the value increases was classified as Property, Plant, andEquipment but not depreciated.• Equipment used in the production process was classified as an investment.
Chapter 11 Solutions
Principles of Accounting Volume 1
Ch. 11 - Property, Plant, and Equipment is considered why...Ch. 11 - Which of the following would not be considered an...Ch. 11 - The legal protection that provides a company...Ch. 11 - Which of the following statements about...Ch. 11 - Ngo Company purchased a truck for $54,000. Sales...Ch. 11 - If a company capitalizes costs that should be...Ch. 11 - Depreciation of a plant asset is the process of...Ch. 11 - An accelerated depreciation method that takes more...Ch. 11 - The estimated economic life of an asset is also...Ch. 11 - The amortization process is like what other...
Ch. 11 - How are intangible assets with an indefinite life...Ch. 11 - If the market value of goodwill is found to be...Ch. 11 - Which of the following represents an event that is...Ch. 11 - Which of the following is true regarding special...Ch. 11 - The loss in value from all causes within a...Ch. 11 - What is the difference between tangible and...Ch. 11 - Define intangible assets.Ch. 11 - What is the difference between a patent and a...Ch. 11 - What is goodwill, and how is it generated?Ch. 11 - For each of the following transactions, state...Ch. 11 - What amounts should be recorded as a cost of a...Ch. 11 - Describe the relationship between expense...Ch. 11 - Define natural resources.Ch. 11 - Explain the difference between depreciation,...Ch. 11 - Explain the differences between the process of...Ch. 11 - What is goodwill, and what are the unique aspects...Ch. 11 - What are some examples of special issues in...Ch. 11 - What is the difference between functional...Ch. 11 - Fombell, Incorporated has the following assets in...Ch. 11 - Jada Company had the following transactions during...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Steele Corp. purchases equipment for $25,000....Ch. 11 - Calico Inc. purchased a patent on a new drug. The...Ch. 11 - Alfredo Company purchased a new 3-D printer for...Ch. 11 - Using the information from EA7, calculate...Ch. 11 - Santa Rosa recently purchased a new boat to help...Ch. 11 - Warriors Productions recently purchased a...Ch. 11 - The following intangible assets were purchased by...Ch. 11 - Sand River Sales has a fork truck used in its...Ch. 11 - New Carlisle, Incorporated, has the following...Ch. 11 - Johnson, Incorporated had the following...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Steele Corp. purchases equipment for $30,000....Ch. 11 - Calico Inc. purchased a patent on a new drug it...Ch. 11 - Kenzie purchased a new 3-D printer for $450,000....Ch. 11 - Using the information from EB7, calculate...Ch. 11 - Ronson recently purchased a new boat to help ship...Ch. 11 - Warriors Production recently purchased a copyright...Ch. 11 - The following intangible assets were purchased by...Ch. 11 - Baglias Wholesale Trinkets has a 3-D printer used...Ch. 11 - Selected accounts from Phipps Corporations trial...Ch. 11 - Selected accounts from Han Corporations trial...Ch. 11 - During the current year, Alanna Co. had the...Ch. 11 - During the current year, Arkells Inc. made the...Ch. 11 - Jada Company had the following transactions during...Ch. 11 - Gimli Miners recently purchased the rights to a...Ch. 11 - Tree Lovers Inc. purchased 100 acres of woodland...Ch. 11 - Referring to PA7 where Kenzie Company purchased a...Ch. 11 - For each of the following unrelated situations,...Ch. 11 - Buchanan Imports purchased McLaren Corporation for...Ch. 11 - Montezuma Inc. purchases a delivery truck for...Ch. 11 - Garcia Co. owns equipment that costs $76,800, with...Ch. 11 - Colquhoun International purchases a warehouse for...Ch. 11 - Selected accounts from Hanna Corporations trial...Ch. 11 - Selected accounts from Boxwood Corporations trial...Ch. 11 - During the current year, Alanna Co. had the...Ch. 11 - During the current year, Arkells Inc. made the...Ch. 11 - Johnson, Incorporated, had the following...Ch. 11 - Underwoods Miners recently purchased the rights to...Ch. 11 - Tree Lovers Inc. purchased 2,500 acres of woodland...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Prepare the assets section of the balance sheet as...Ch. 11 - For each of the following unrelated situations,...Ch. 11 - On May 1, 2015, Zoe Inc. purchased Branta Corp....Ch. 11 - Farm Fresh Agriculture Company purchased Sunny...Ch. 11 - Montezuma Inc. purchases a delivery truck for...Ch. 11 - Garcia Co. owns equipment that costs $150,000,...Ch. 11 - Urquhart Global purchases a building to house its...Ch. 11 - You are an accounting student at your local...Ch. 11 - Speedy delivery service recently hired a new...Ch. 11 - Speedy Delivery has a very lazy accountant. When...Ch. 11 - Malone Industries has been in business for five...Ch. 11 - Your family started a new manufacturing business...
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- After a while, Brekdak as head of the Accounting Department, realized that the system of record that had been working for the last 2 years at PT. Suka Maju experienced a misstatement due to an error in adopting an estimate from the accounting records that turned into a straight-line method. With the changes of used in the depreciation estimation method, cause the company's performance to decline and how were errors found in the recording of the financial statement accounts. As a professional auditor who found these errors during an audit, what suggestions and recommendations can you make based on the provisions of the accounting standards in Indonesia?arrow_forwardAfter a while, Brekdak as head of the Accounting Department, realized that the system of record that had been working for the last 2 years at PT. Suka Maju experienced a misstatement due to an error in adopting an estimate from the accounting records that turned into a straight-line method. With the changes of used in the depreciation estimation method, cause the company's performance to decline and how were errors found in the recording of the financial statement accounts. As a professional auditor who found these errors during an audit, what suggestions and recommendations can you make based on the provisions of the accounting standards?arrow_forwardAfter a while, Brekdak as head of the Accounting Department, realized that the system of record that had been working for the last 2 years at PT. Suka Maju experienced a misstatement due to an error in adopting an estimate from the accounting records that turned into a straight-line method. With the changes of used in the depreciation estimation method, cause the company's performance to decline and how were errors found in the recording of the financial statement accounts. As a professional auditor who found these errors during an audit, what suggestions and recommendations can you make based on the provisions of the accounting standards in Indonesia? Which is the most appropriate standard to help you to give recommendations and briefly explain things related to the accounting standard and why do you think the number of the PSAK is very appropriate as a guide to guide you in providing recommendations to Brekdak.arrow_forward
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