Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 1MCQ
To determine
Cost of equipment:
The cost of equipment is the cost which is incurred to purchase equipment and it includes all the expenses incurred for getting the equipment to the work place. These costs are installation cost, trial cost, sales tax, etc. Discount will be deducted, if any.
To select:
The correct amount of the cost of equipment.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Nelson Company purchased equipment and incurred the following costs:
Cash price = $55,000
Sales taxes = $4,400
Insurance during transit = $400
Site preparation, installation, and testing= $2,300What amount should be used as the cost basis of the equipment?
The Miller Company paid $10,000 to acquire a 100 ton press. Freight charges to deliver the equipment amounted to $1,500 and were paid by Miller. Installation costs amounted to $570, and machine testing charges amounted to $250.
Calculate the amount that should be capitalized to the Equipment account. $Answer
Shaw Company purchased a machine for P 1 260 000 that was placed in service at year – end. The entity incurred additional costs for this machine.
Shipping 30 000
Installation 40 000
Testing 50 000
At year end, what amount should be reported as machinery?
Chapter 7 Solutions
Cornerstones of Financial Accounting
Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - How does the cost concept affect accounting for...Ch. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - What factors must be known or estimated in order...Ch. 7 - How do the accelerated and straight-line...Ch. 7 - Prob. 9DQCh. 7 - Prob. 10DQ
Ch. 7 - Prob. 11DQCh. 7 - Prob. 12DQCh. 7 - Prob. 13DQCh. 7 - Prob. 14DQCh. 7 - Prob. 15DQCh. 7 - Prob. 16DQCh. 7 - Prob. 17DQCh. 7 - Prob. 18DQCh. 7 - Prob. 1MCQCh. 7 - Prob. 2MCQCh. 7 - When depreciation is recorded each period, what...Ch. 7 - Prob. 4MCQCh. 7 - Refer to the information for Cox Inc. above. What...Ch. 7 - Refer to the information for Cox Inc. above. What...Ch. 7 - Which of the following statements is true...Ch. 7 - Normal repair and maintenance of an asset is an...Ch. 7 - Chapman Inc. purchased a piece of equipment in...Ch. 7 - Bradley Company purchased a machine for $34,000 on...Ch. 7 - Prob. 11MCQCh. 7 - Which of the following statements is true? a. The...Ch. 7 - Prob. 13MCQCh. 7 - Heston Company acquired a patent on January 1,...Ch. 7 - Prob. 15MCQCh. 7 - ( Appendix 7 A) Murnane Company purchased a...Ch. 7 - Prob. 17CECh. 7 - Prob. 18CECh. 7 - Straight-Line Depreciation Refer to the...Ch. 7 - Prob. 20CECh. 7 - Prob. 21CECh. 7 - Revision of Depreciation On January 1, 2017, Slade...Ch. 7 - Disposal of an Operating Asset On August 30,...Ch. 7 - Prob. 24CECh. 7 - Cost of Intangible Assets Advanced Technological...Ch. 7 - Prob. 26CECh. 7 - Prob. 27CECh. 7 - (Appendix 7A) Impairment Brown Industries had two...Ch. 7 - Prob. 29BECh. 7 - Acquisition Cost Desert State University installed...Ch. 7 - Depreciation Concepts Listed below are concepts...Ch. 7 - Depreciation Methods On January 1, 2019, Loeffler...Ch. 7 - Expenditures After Acquisition Listed below are...Ch. 7 - Revision of Depreciation On January 1, 2019, the...Ch. 7 - Disposal of an Operating Asset Jolie Company owns...Ch. 7 - Analyzing Fixed Assets Pitt reported the following...Ch. 7 - Prob. 37BECh. 7 - Prob. 38BECh. 7 - ( Appendix 7A) Impairment Listed below is...Ch. 7 - Prob. 40ECh. 7 - Prob. 41ECh. 7 - Prob. 42ECh. 7 - Prob. 43ECh. 7 - Cost of a Fixed Asset Colson Photography Service...Ch. 7 - Prob. 45ECh. 7 - Cost and Depreciation On January 1, 2019, Quick...Ch. 7 - Characteristics of Depreciation Methods Below is a...Ch. 7 - Prob. 48ECh. 7 - Depreciation Methods Clearcopy, a printing...Ch. 7 - Depreciation Methods Quick-as-Lightning, a...Ch. 7 - Inferring Original Cost Barton Construction...Ch. 7 - Choice Among Depreciation Methods Walnut Ridge...Ch. 7 - Revision of Depreciation On January 1, 2017,...Ch. 7 - Capital versus Revenue Expenditure Warrick Water...Ch. 7 - Expenditures After Acquisition The following...Ch. 7 - Expenditures After Acquisition Roanoke...Ch. 7 - Prob. 57ECh. 7 - Prob. 58ECh. 7 - Disposal of Fixed Asset Pacifica Manufacturing...Ch. 7 - Prob. 60ECh. 7 - Prob. 61ECh. 7 - Prob. 62ECh. 7 - Balance Sheet Presentation The following...Ch. 7 - Prob. 64ECh. 7 - Prob. 65ECh. 7 - Prob. 66ECh. 7 - Prob. 67ECh. 7 - Financial Statement Presentation of Operating...Ch. 7 - A Cost of a Fixed Asset Mist City Car Wash...Ch. 7 - Depreciation Methods Hansen Supermarkets purchased...Ch. 7 - Depreciation Schedules Wendt Corporation acquired...Ch. 7 - Expenditures After Acquisition Pasta, a restaurant...Ch. 7 - Prob. 73APSACh. 7 - Prob. 74APSACh. 7 - Prob. 75APSACh. 7 - Prob. 76APSACh. 7 - Prob. 68BPSBCh. 7 - Cost of a Fixed Asset Metropolis Country Club...Ch. 7 - Depreciation Methods Graphic Design Inc. purchased...Ch. 7 - Depreciation Schedules Dunn Corporation acquired a...Ch. 7 - Prob. 72BPSBCh. 7 - Prob. 73BPSBCh. 7 - Prob. 74BPSBCh. 7 - Prob. 75BPSBCh. 7 - Prob. 76BPSBCh. 7 - Prob. 77.1CCh. 7 - Prob. 77.2CCh. 7 - Prob. 78.1CCh. 7 - Prob. 78.2CCh. 7 - Prob. 79.1CCh. 7 - Prob. 79.2CCh. 7 - Prob. 79.3CCh. 7 - Prob. 80.1CCh. 7 - Prob. 80.2CCh. 7 - Prob. 80.3CCh. 7 - Prob. 80.4CCh. 7 - Prob. 80.5CCh. 7 - Prob. 80.6CCh. 7 - Prob. 80.7CCh. 7 - Prob. 80.8CCh. 7 - Comparative Analysis: Under Armour, Inc., versus...Ch. 7 - Prob. 81.2CCh. 7 - Comparative Analysis: Under Armour, Inc., versus...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...
Knowledge Booster
Learn more about
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
- Prepare journal entries for the following transactions: a. A machine with a cost of 10,000 and accumulated depreciation of 8,000 was sold for 2,500. b. A machine with a cost of 10,000 and accumulated depreciation of 8,000 was traded for a new machine with a market value of 12,000. Cash of 9,500 was also paid.arrow_forwardThe following costs were incurred to purchase a machine: Purchase price 50,000 Transportation costs 800 Insurance during transportation 100 Interest on loan during first month of assets use 250 Determine the acquisition cost.arrow_forwardNgo Company purchased a truck for $54,000. Sales tax amounted to $5,400; shipping costs amounted to $1,200; and one-year registration of the truck was $100. What is the total amount of costs that should be capitalized? A. $60,600 B. $66,100 C. $54,000 D. $59,400arrow_forward
- Machinery that cost $144,000 and on which $120,000 of accumulated depreciation has beenrecorded was disposed of for $36,000 cash. The entry to record this event would include aa. gain of $12,000.b. loss of $12,000.c. credit to the Equipment account for $36,000.d. credit to Accumulated Depreciation for $120,000arrow_forwardMidnight, Inc. incurred the following costs related to equipment purchased on January 1, 2022: • Purchased equipment for $80,000, terms 2/ 10, net 30. Paid for the equipment on January 5, 2022. • Had the equipment installed and paid the installer $5,000. • Paid the freight bill for the truck that delivered the equipment for $800. • Advertised a new product that will be produced by the new equipment, $1,900. • Sales taxes paid on the equipment amounted to $6,000. • During installation, a part was broken off and had to be replaced for $2,700. • Midnight believes the machine will be useful for 5 years, at which time it will be sold for $5,000. Assuming Midnight, Inc. uses the straight-line method of depreciation, what will depreciation expense on its 2023 income statement be? Select one: a. $35,330 b. $17,580 c. $19,170 d. $34,720 e. $17,040arrow_forwardDuring the fiscal year, ABC Company incurred the following costs related to property, plant and equipment: Amount paid to the contractor for the building constructed 12,000,000Building permit fee 120,000Excavation cost 110,000Architect fee 440,000Interest that would have been earned had the money used during theperiod of construction been invested in the money market 330,000Invoice cost of machine acquired, terms 8/10, n/30 6,500,000Freight, unloading and delivery charges for machine acquired 100,000Custom duties and other charges 270,000Allowance and hotel accommodation, paid to foreign techniciansduring installation and test run of machine 520,000Royalty payment on machines purchased (based on units producedand sold) 240,000Cash paid for the purchase of land (none was allocated to oldbuilding) 10,000,000Mortgage assumed on the land purchased 2,000,000Realtor’s commission 650,000Legal fees, realty taxes and documentation expenses 900,000Amount paid to relocate persons squatting on the…arrow_forward
- Barton Brick purchased three machines at a total cost of $480,000. An appraiser assigned the following fair market values to the machines: Machine X $300,000; Machine Y $200,000; and Machine Z $100,000. The cost that should be assigned to the account of machine X, Y, and Z, respectively, are a. $160,000; $160,000; $160,000 b. $240,000; $160,000; $80,000 c. $300,000; $200,000; $100,000 d. Some other amountsarrow_forwardKeaubie Co. purchased machinery at a cost of $175,000 cash. Other costs included: taxes, $15,500, freight charges$6,500, and insurance during transit, $5,500, insurance for first year $10,000 . Assume that Keaubie Co. sold the equipment for $14,000 cash and accumulated depreciation on the equipment is $190,000, . Journalize the transaction.arrow_forwardABC Corp. acquired the following assets on June 30, 20X1: Cost Scrap Value Useful life Tools 21,000 1,000 4 Machines 102,000 7,000 5 Furniture 15,000 0 3 How much is the total depreciation expense at Dec 31, 20X1 using the straight line method?arrow_forward
- 4- Our company paid 236,000 TL including 18% VAT to the seller for the machine it acquired to use in its activities, 21,240 TL including 18% VAT to the transport company for its transportation, and 15,000 TL for the assembly of the machine, excluding 18% VAT. What is the total cost of the relevant machine to the enterprise according to the cost cost measure? a) 253,700 TL B) 274,940 TL NS) 257,240 TL D) 233,000 TL TO) 200.000 TLarrow_forwardDuring the current fiscal year, Heinrich Corp. incurred the following costs related to property, plant, and equipment: Amount paid to the contractor for the building constructed P13,000,000 Building permit fee 120,000 Excavation cost 110,000 Architect fee 440,000 Interest that would have been earned had the money used during the period of construction been invested in the money market 330,000 Invoice cost of machine acquired, terms 3/10, n/30 6,500,000 Freight, unloading and delivery charges for machine acquired 100,000 Custom duties and other charges 270,000 Allowance and hotel accommodation, paid to foreign technicians during installation and test run of machine 520,000 Royalty payment on machines purchased (based on units produced and sold) 240,000 Cash paid for the purchase of land (none was allocated to old building) 10,000,000 Mortgage assumed on the land purchased 2,100,000 Realtor’s commission 650,000 Legal fees, realty taxes and documentation expenses 900,000 Amount…arrow_forwardB. The following information is extracted from Jat Sdn Bhd’s records; Depreciation of buildings usd45,000 Store Rental usd30,000 Value of buildings 450,000 Jat has two (2) production departments, Department A and Department B. The following related information is also provided by Jat: Department A Department B Floor area (square meters) 8000 11000 Number of employees 56 53 You are required to calculate the apportionment of the overhead cost of depreciation of buildings based on floor area for: i) Department A ii) department Barrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Asset impairment explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=lWMDdtHF4ZU;License: Standard Youtube License