Financial Accounting - Access
4th Edition
ISBN: 9781259958533
Author: SPICELAND
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 7, Problem 7.2BP
Determine the acquisition cost of equipment (LO7–1)
Flip Side of P7–8B
Sicily Pizza purchased baking owns from New World Deli. New World Deli was closing its bakery business and sold its three-year-old owns for $341,000. In addition to the purchase price, Sicily Pizza paid shipping costs of $16,000. Employees of Sicily Pizza installed the ovens; labor costs were $17,000. An outside contractor performed some of the electrical work for $3,800. Sicily Pizza consumed pizza dough with a cost of $1,300 in testing the ovens. It then installed new timers on the ovens at a cost of $800 and placed the machines in operation.
Required:
1. Prepare a schedule showing the amount at which Sicily Pizza should record the ovens in the Equipment account.
2. Indicate where any amounts not included in the Equipment account should be recorded.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
H7.
On January 1, 2016, Wheeler, Inc. purchased some equipment for $3,900. The equipment had an estimated life of five years and an expected residual value of $200. On July 1, 2018, the equipment was sold for $1,000. Wheeler uses straight-line depreciation. What was the amount of the loss or gain recognized in the sale?
Group of answer choices
$1,000 gain
$1,850 gain
$1,050 loss
$3,900 loss
Please show all step by step calculation
3.ABC Company bought Patent A for P400,000 and Patent B for P600,000. ABC Company paid acquisition costs of P50,000 for Patent A and P70,000 for Patent B. Both patents were challenged in legal actions. ABC Company paid P200,000 in legal fees for a successful defense of Patent A and P300,000 in legal fees for an unsuccessful defense of Patent B. What amount should ABC Company capitalize for patents?
4.ABC Company incurred P1,600,000 of research and development costs to develop a product for which a patent was granted on Jan 1, 2021. Legal fees and other costs associated with registration of the patent totaled P300,000. On March 31, 2021, ABC Company paid P450,000 for legal fees in a successful defense of the patent. The total amount capitalized for this patent through March 31, 2021 should be
P11.2 (LO 1, 2) (Deprec. for partial periods - SL, Act., SYD, and Declining - Balance) The cost of equip. purchased by Charleston, Inc. on June 1, 2020, is $89,000. It is estimated that the machine will have a $5,000 salvage value at the end of it's service life.
It's service life is estimated at 7 years, it's total working hours are estimated at 42,000, and it's total production is estimated at 525,000 units.
During 2020, the machine was operated 6,000 hours and produced 55,000 units. During 2021, the machine was operated 5,500 hours and produced 48,000 units.
Instructions: Compute deprec. expense on the machine for the year ending Dec. 31, 2020, and the year ending Dec. 31, 2021, using the following methods.
a. Straight-line.
b. Units-of-output.
c. Working hours.
d. Sum-of-the-years'-digits.
e. Declining-balance (twice the straight-line rate).
Chapter 7 Solutions
Financial Accounting - Access
Ch. 7 - Prob. 1RQCh. 7 - What are the two major categories of long-term...Ch. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 6RQCh. 7 - Equipment includes machinery used in manufacturing...Ch. 7 - Prob. 8RQCh. 7 - Prob. 9RQCh. 7 - Prob. 10RQ
Ch. 7 - Prob. 11RQCh. 7 - How do we decide whether to capitalize (record as...Ch. 7 - Explain the usual accounting treatment for repairs...Ch. 7 - Prob. 14RQCh. 7 - How is the dictionary definition different from...Ch. 7 - What factors must we estimate in allocating the...Ch. 7 - Prob. 17RQCh. 7 - Prob. 18RQCh. 7 - Prob. 19RQCh. 7 - Assume that Little King Sandwiches uses...Ch. 7 - Assume Little King Sandwiches depreciates a...Ch. 7 - Prob. 22RQCh. 7 - Prob. 23RQCh. 7 - What is book value? How do we compute the gain or...Ch. 7 - Prob. 25RQCh. 7 - Prob. 26RQCh. 7 - Prob. 27RQCh. 7 - Prob. 28RQCh. 7 - Determine the initial cost of land (LO71) Fresh...Ch. 7 - Prob. 7.2BECh. 7 - Prob. 7.3BECh. 7 - Compute research and development expense (LO72)...Ch. 7 - Prob. 7.5BECh. 7 - Explain the accounting definition of depreciation...Ch. 7 - Prob. 7.7BECh. 7 - Prob. 7.8BECh. 7 - Prob. 7.9BECh. 7 - Account for the sale of long-term assets (LO76)...Ch. 7 - Account for the exchange of long-term assets...Ch. 7 - Account for the exchange of long-term assets...Ch. 7 - Prob. 7.13BECh. 7 - Determine the impairment loss (LO78) Vegetarian...Ch. 7 - Prob. 7.15BECh. 7 - McCoys Fish House purchases a tract of land and an...Ch. 7 - Orion Flour Mills purchased a new machine and made...Ch. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.5ECh. 7 - Prob. 7.6ECh. 7 - Prob. 7.7ECh. 7 - Prob. 7.8ECh. 7 - Prob. 7.9ECh. 7 - Determine depreciation for the first year under...Ch. 7 - Deformine depreciation under three methods (LO74)...Ch. 7 - Determine straight-line depreciation for partial...Ch. 7 - Determine straight-line depreciation for partial...Ch. 7 - Prob. 7.14ECh. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Record the sole of equipment (L076) Abbott...Ch. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - Complete the accounting cycle using long-term...Ch. 7 - The Italian Bread Company purchased land as a...Ch. 7 - Prob. 7.2APCh. 7 - Prob. 7.3APCh. 7 - Prob. 7.4APCh. 7 - Determine depreciation under three methods (LO74)...Ch. 7 - Prob. 7.6APCh. 7 - Compute depreciation, amortization, and book value...Ch. 7 - Prob. 7.8APCh. 7 - Calculate and interpret ratios (LO77) Sub Station...Ch. 7 - Calculate and interpret ratios (LO77) University...Ch. 7 - Prob. 7.1BPCh. 7 - Determine the acquisition cost of equipment (LO71)...Ch. 7 - Prob. 7.3BPCh. 7 - Prob. 7.4BPCh. 7 - Determine depreciation under three methods (LO74)...Ch. 7 - Prob. 7.6BPCh. 7 - Prob. 7.7BPCh. 7 - Record the disposal of equipment (LO76) Flip Side...Ch. 7 - Calculate and Interpret ratios (LO77) Papas Pizza...Ch. 7 - Calculate and interpret ratios (LO77) Barry...Ch. 7 - Prob. 7.1APCPCh. 7 - Prob. 7.2APFACh. 7 - Prob. 7.3APFACh. 7 - Prob. 7.4APCACh. 7 - Prob. 7.5APECh. 7 - Written Communication At a recent luncheon, you...Ch. 7 - Earnings Management Edward L. Vincent is CFO of...
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
- LO.3 Renata Corporation purchased equipment in 2017 for 180,000 and has taken 83,000 of regular MACRS depreciation. Renata Corporation sells the equipment in 2019 for 110,000. What is the amount and character of Renatas gain or loss?arrow_forward(LO.2, 3 Federal Taxation) Orange Corporation acquired new office furniture on August 15, 2020, for $130,000. Orange does not elect immediate expensing under section 179. Orange claims any available additional first-year depreciation. Determine Orange’s cost recovery for 2020. How would your answer change if Orange decided to use $52,000 of bonus depreciation and use normal MACRS on the balance of the acquisition cost?arrow_forwardP11.2 (LO 1,2) (Deprec. for partial periods - SL, Act., SYD, and Declining-Balance) The cost of equip. purchased by Charleston, Inc., on June 1, 2020, is $89,000. It is estimated that the machine will have a $5,000 salvage value at the end of it's service life. It's service life is estimated at 7 years, it's total working hours are estimated at 42,000, and it's total production is estimated at 525,000 units. During 2020, the machine was operated 6,000 hours and produced 55,000 units. During 2021, the machine was operated 5,500 hours and produced 48,000 units. Instructions: Compute deprec. expense on the machine for the year ending Dec. 31, 2020, and the year ending Dec. 31, 2021, using the following methods. A. Sum-of-the-years'-digits. B. Declining-balance (twice the straight-line rate).arrow_forward
- L0.2J 3J 9 On June 5, 2018, Javier Sanchez purchased and placed in service a new 7-year class asset costing $560,OOO for use in his landscaping businessJ which he operates as a single member LLC (Sanchez Landscaping LLC). During 2018, his business generated a net income of $945, 780 before any § 179 immediate expense election. Rather than using bonus depreciationJ Javier would like to use 179 to expense $200,OOO of this asset and then use regular MACRS to cost recover the remaining cost. Given this information, determine the cost recovery deductions that Javier can claim with respect to this asset in 2018 and 2019. Complete Javier's Form 4562 (page 1) for 201 His Social Security number is 123-45- 6789.arrow_forwardEntity A acquires equipment on January 1, 20x1. Information on costs is as follows: Purchase price, gross of P10,000 trade discount 800,000 Non-refundable purchase taxes 20,000 Delivery and handling costs 40,000 Installation costs 30,000 Present value of decommissioning and restoration costs 10,000 1.) How much is the initial cost of the equipment? A. P 890,000 B. P 820,000 C. P 900,000 D. P 870,000arrow_forward16 On December 31, 2021, Purple Company sold a building, receiving as a consideration a P4,000,000 non-interest bearing note due in three years. The building costs P3,800,000 and the accumulated depreciation was P1,600,000 at the date of sale. The prevailing rate of interest for a note of this type was 12%. How much gain or loss should Purple report on the sale of the asset? Group of answer choices 1,800,000 gain 988,776 loss 647,121 gain 988,776 gainarrow_forward
- 28 Assume that Abdul Baari LLC acquiring a new truck for OMR 45000. In exchange, the company pays OMR 32000 cash and old truck. The old truck originally cost OMR 40000 and has accumulated depreciation of OMR 25,000, which implies a OMR 15,000 book value at the time of exchange. From the following given options identify the correct journal entry for profit or loss on exchange of old truck with new truck. a. Dr New Truck A/c OMR 45000 Dr Loss on exchange of truck OMR 2000 Dr Accumulated depreciation on old Truck OMR 25000 and Cr cash A/c 32000 Cr Old Truck A/C OMR 40000 b. Dr New Truck A/C OMR 47000 and Cr Cash A/c 32000 Cr Old truck A/c 15000 c. Dr New Truck A/C OMR 45000 Dr Loss on exchange of old Truck OMR 2000 and cash A/c 32000 Cr old Truck A/c OMR 15000 d. None of the given optionsarrow_forward28 Assume that Abdul Baari LLC acquiring a new truck for OMR 45000. In exchange, the company pays OMR 32000 cash and old truck. The old truck originally cost OMR 40000 and has accumulated depreciation of OMR 25,000, which implies a OMR 15,000 book value at the time of exchange. From the following given options identify the correct journal entry for profit or loss on exchange of old truck with new truck. a. Dr New Truck A/c OMR 45000 Dr Loss on exchange of truck OMR 2000 Dr Accumulated depreciation on old Truck OMR 25000 and Cr cash A/c 32000 Cr Old Truck A/C OMR 40000 b. Dr New Truck A/C OMR 47000 and Cr Cash A/c 32000 Cr Old truck A/c 15000 c. Dr New Truck A/C OMR 45000 Dr Loss on exchange of old Truck OMR 2000 and cash A/c 32000 Cr old Truck A/c OMR 15000 d. None of the given options Clear my choicearrow_forwardPQ16.04 Shaffer Company acquires land for $77,000 cash. Additional costs are as follows. Removal of shed $ 300 Filling and grading 1,500 Salvage value of lumber of shed 120 Broker commission 1,130 Paving of parking lot 10,000 Closing costs 560 Shaffer will record the acquisition cost of the land at?arrow_forward
- ABC Corp purchased land and building at a lump price of P6M. ABC demolished the building and constructed a new one. Cost of demolition is P30,000 and sold salvaged materials from the demolished building for P7,500. ABC also incurred the following additional costs: Legal fees in titling the land, P10,000 Options paid for the land and building, P3,000 Payment to tenants to vacate the place, P6,000 Construction materials, labor and overhead P4,250,000 Fair values of the land and building were P2.5M and P5M respectively. How much is the cost of the NEW building? 8,278,500 4,280,000 4,272,500 4,250,000arrow_forwardABC Corp purchased land and building at a lump price of P6M. ABC demolished the building and constructed a new one. Cost of demolition is P30,000 and sold salvaged materials from the demolished building for P7,500. ABC also incurred the following additional costs: Legal fees in titling the land, P10,000 Options paid for the land and building, P3,000 Payment to tenants to vacate the place, P6,000 Construction materials, labor and overhead P4,250,000 Fair values of the land and building were P2.5M and P5M respectively. How much is the cost of the NEW building? a. 8278500 b. 4280000 c.4272500 d.4250000arrow_forwardABC Corp purchased land and building at a lump price of P6M. ABC demolished the building and constructed a new one. Cost of demolition is P30,000 and sold salvaged materials from the demolished building for P7,500. ABC also incurred the following additional costs: Legal fees in titling the land, P10,000 Options paid for the land and building, P3,000 Payment to tenants to vacate the place, P6,000 Construction materials, labor and overhead P4,250,000 Fair values of the land and building were P2.5M and P5M respectively. How much is the cost of the NEW building? PPE intermediate accountingarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT
Capital Budgeting Introduction & Calculations Step-by-Step -PV, FV, NPV, IRR, Payback, Simple R of R; Author: Accounting Step by Step;https://www.youtube.com/watch?v=hyBw-NnAkHY;License: Standard Youtube License