HORNGRENS COST ACCOUNTING W/ACCESS
16th Edition
ISBN: 9781323687604
Author: Datar
Publisher: PEARSON
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Chapter 21, Problem 21.19MCQ
To determine
Relevant Cost of Project:
Relevant cost of project refers to the avoidable cost which incurred when investment decision is made. All the costs which are affected with the investment in project are relevant costs of the project.
To identify: The correct option.
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Oaktree Company purchased new equipment and made the following expenditures:
Purchase price
Sales tax
$46,000
2, 300
Freight charges for shipnent of equipnent
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Installation of equipment
71e
910
1,100
The equipment, including sales tax, was purchased on open account, with payment due in 30 days. The other expenditures
listed above were paid in cash.
Required:
Prepare the necessary journal entries to record the above expenditures. (If no entry is required for a transaction/event, select
"No journal entry required" in the first account field.)
Journal entry worksheet
>
Record the purchase of equipment.
Note: Enter debits before credits.
Transaction
General Journal
Debit
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Journal entry worksheet
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Record any expenditures not capitalized in the purchase of equipment.
Note Peter Oebits before credita
Transaction
General Journal
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21
A car was purchased by a newsagent business in May 20X0 for:
$
Cost 10,000
Road tax 150
Total 10,150
The business adopts a date of 31 December as its year end.
The car was traded in for a replacement vehicle in August 20X3 at an agreed value of $5,000.
It has been depreciated at 25% per annum on the reducing balance method, charging a full year's
depreciation in the year of purchase and none in the year of sale.
What was the profit or loss on disposal of the vehicle during the year ended December 20X3?
REVIEW PROBLEM: SALE OF PROPERTY, PLANT AND EQUIPMENT
The 1. M. Stoned Company acquired a machine from the Mickey Lobe Corporation on January 1, 20A0.
The purchase price of the machine was $100,000, which did not include the 6% sales tax. Installation
and delivery charges amounted to $4,000. One of the employees, Bad Wiser, damaged some parts while
installing the machine. It cost $500 to repair the damage. The machine has a projected useful life or 10
years. The estimated salvage for the machine is $5,000.
REQUIRED:
1. Compute the initial cost of the machine on January 1, 20X6:
100000 +1,000 +6%
6000
110,000
2. Compute the yearly depreciation expense under the straight-line method:
110,000
5,000
10,500
10
3. Show what this machine would look like on the Balance Sheet at the end of 20X9.
4. Assume the machine is sold on December 31, 20X9 for $60,000. Compute the gain or
loss on the sale. Show all work clearly!!!
(110,000- 60,000)x.
50,000
5. Record the sale.
Chapter 21 Solutions
HORNGRENS COST ACCOUNTING W/ACCESS
Ch. 21 - Capital budgeting has the same focus as accrual...Ch. 21 - List and briefly describe each of the five stages...Ch. 21 - Prob. 21.3QCh. 21 - Only quantitative outcomes are relevant in capital...Ch. 21 - How can sensitivity analysis be incorporated in...Ch. 21 - Prob. 21.6QCh. 21 - Describe the accrual accounting rate-of-return...Ch. 21 - Prob. 21.8QCh. 21 - Lets be more practical. DCF is not the gospel....Ch. 21 - All overhead costs are relevant in NPV analysis....
Ch. 21 - Prob. 21.11QCh. 21 - Distinguish different categories of cash flows to...Ch. 21 - Prob. 21.13QCh. 21 - How can capital budgeting tools assist in...Ch. 21 - Distinguish the nominal rate of return from the...Ch. 21 - A company should accept for investment all...Ch. 21 - Prob. 21.17MCQCh. 21 - Which of the following statements is true if the...Ch. 21 - Prob. 21.19MCQCh. 21 - Nicks Enterprises has purchased a new machine tool...Ch. 21 - Prob. 21.21ECh. 21 - Capital budgeting methods, no income taxes. Yummy...Ch. 21 - Capital budgeting methods, no income taxes. City...Ch. 21 - Prob. 21.24ECh. 21 - Capital budgeting with uneven cash flows, no...Ch. 21 - Comparison of projects, no income taxes. (CMA,...Ch. 21 - Payback and NPV methods, no income taxes. (CMA,...Ch. 21 - DCF, accrual accounting rate of return, working...Ch. 21 - Prob. 21.29ECh. 21 - Prob. 21.30ECh. 21 - Project choice, taxes. Klein Dermatology is...Ch. 21 - Prob. 21.32ECh. 21 - Selling a plant, income taxes. (CMA, adapted) The...Ch. 21 - Prob. 21.36PCh. 21 - NPV and AARR, goal-congruence issues. Liam...Ch. 21 - Payback methods, even and uneven cash flows. Sage...Ch. 21 - Replacement of a machine, income taxes,...Ch. 21 - Recognizing cash flows for capital investment...Ch. 21 - NPV, inflation and taxes. Fancy Foods is...Ch. 21 - NPV of information system, income taxes. Saina...
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