Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 7.76BP
1.
To determine
To Identify: The proper account for each of the costs listed and also to calculate the total cost of each asset.
2.
To determine
To Record: The
3.
To determine
To Discuss: The reason behind the necessity for the manager to understand the concepts covered in this problem.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
. (Learning Objectives 1, 3, 4: Measure and account for the cost of plant assets anddepreciation; analyze and record a plant asset disposal) Blair, Inc., has the following plantasset accounts: Land, Buildings, and Equipment, with a separate accumulated depreciationaccount for each of these except Land. Blair completed the following transactions:Jan 3 Traded in equipment with accumulated depreciation of $63,000 (cost of$130,000) for similar new equipment with a cash cost of $171,000. Receiveda trade-in allowance of $71,000 on the old equipment and paid $100,000in cash.Jun 30 Sold a building that had a cost of $635,000 and had accumulated depreciationof $170,000 through December 31 of the preceding year. Depreciationis computed on a straight-line basis. The building has a 40-year useful lifeand a residual value of $295,000. Blair received $135,000 cash and a$325,750 note receivable.Oct 31 Purchased land and a building for a single price of $340,000 cash. An independent appraisal valued…
(Learning Objectives 1, 3: Measure, depreciate, and report plant assets) During2018, Chang’s Book Store paid $481,000 for land and built a store in Newark, New Jersey.Prior to construction, the city of Newark charged Chang’s $1,200 for a building permit, whichChang’s paid. Chang’s also paid $15,200 for architect’s fees. The construction cost of $679,900was financed by a long-term note payable, with interest costs of $28,180 paid at the completionof the project. The building was completed June 30, 2018. Chang’s depreciates the buildingusing the straight-line method over 35 years, with estimated residual value of $335,000.1. Journalize transactions for the following (explanations are not required):a. Purchase of the landb. All the costs chargeable to the building in a single entryc. Depreciation on the building for 20182. Report Chang’s plant assets on the company’s balance sheet at December 31, 2018.3. What will Chang’s income statement for the year ended December 31, 2018, report…
(Learning Objectives 1, 2, 3: Measure and account for plant assets; distinguish acapital expenditure from an expense; measure and record depreciation) Becker Supply, Inc.,opened an office in White Bear Lake, Minnesota. Becker incurred the following costs in acquiring land, making land improvements, and constructing and furnishing the new sales building:LO 1, 2, 3a. Purchase price of land, including an old building that will be usedfor a garage (land market value is $310,000; building marketvalue is $90,000)..................................................................................... $340,000b. Grading (leveling) land............................................................................ 8,800c. Fence around the land............................................................................. 31,400d. Attorney fee for title search on the land .................................................. 1,100e. Delinquent real estate taxes on the land to be paid by Becker Supply......…
Chapter 7 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. 7 - Smatter Corporation purchased land for a new...Ch. 7 - Carlos Company purchased a building and land for...Ch. 7 - Whitmore Corporation purchased a new delivery van...Ch. 7 - When a company expenses the cost of maintenance...Ch. 7 - Prob. 5QCCh. 7 - Planter Company purchased a delivery van for...Ch. 7 - Bixby Corporation purchased a forklift for 40,000...Ch. 7 - On the first day of its fiscal year, Spearhead...Ch. 7 - The depreciation method that does not initially...Ch. 7 - Sokolsky Excavating purchased a used dump truck...
Ch. 7 - Barron Fuel purchased an oil well for 200,000. The...Ch. 7 - Prob. 12QCCh. 7 - Prob. 13QCCh. 7 - Prob. 14QCCh. 7 - Prob. 15QCCh. 7 - Prob. 16QCCh. 7 - Prob. 7.1ECCh. 7 - LO 1 (Learning Objective 1: Measure the cost and...Ch. 7 - LO 1 (Learning Objective 1: Measure and record the...Ch. 7 - Prob. 7.3SCh. 7 - Prob. 7.4SCh. 7 - LO 3 (Learning Objective 3: Compute depreciation...Ch. 7 - Prob. 7.6SCh. 7 - LO 3 (Learning Objective 3: Compute depreciation...Ch. 7 - LO3 (Learning Objective 3: Compute depreciation...Ch. 7 - LO 3 (Learning Objective 3: Compute depreciation...Ch. 7 - LO 3 (Learning Objective 3: Compute depreciation...Ch. 7 - LO 3 (Learning Objective 3: Compute depreciation...Ch. 7 - Prob. 7.12SCh. 7 - Prob. 7.13SCh. 7 - Prob. 7.14SCh. 7 - Prob. 7.15SCh. 7 - Prob. 7.16SCh. 7 - Prob. 7.17SCh. 7 - LO 6 (Learning Objective 6: Explain the effect of...Ch. 7 - Prob. 7.19SCh. 7 - LO 7 (Learning Objective 7: Calculate return on...Ch. 7 - Prob. 7.21SCh. 7 - Prob. 7.22AECh. 7 - Prob. 7.23AECh. 7 - LO 2 (Learning Objective 2: Distinguish capital...Ch. 7 - Prob. 7.25AECh. 7 - LO 3 (Learning Objective 3: Determine depreciation...Ch. 7 - LO 1,3,8 E7-27A, (Learning Objectives 1, 3, 8:...Ch. 7 - LO 3 (Learning Objective 3: Change a plant assets...Ch. 7 - LO 3, 4 (Learning Objectives 3, 4: Compute...Ch. 7 - Prob. 7.30AECh. 7 - LO 1, 3, 4 (Learning Objectives 1, 3, 4: Measure a...Ch. 7 - Prob. 7.32AECh. 7 - Prob. 7.33AECh. 7 - Prob. 7.34AECh. 7 - LO 7 (Learning Objective 7: Calculate return on...Ch. 7 - Prob. 7.36AECh. 7 - Prob. 7.37BECh. 7 - Prob. 7.38BECh. 7 - Prob. 7.39BECh. 7 - Prob. 7.40BECh. 7 - Prob. 7.41BECh. 7 - Prob. 7.42BECh. 7 - LO 3 (Learning Objective 3: Change a plant assets...Ch. 7 - LO 3.4 (Learning Objectives 3.4: Compute...Ch. 7 - Prob. 7.45BECh. 7 - Prob. 7.46BECh. 7 - Prob. 7.47BECh. 7 - Prob. 7.48BECh. 7 - Prob. 7.49BECh. 7 - Prob. 7.50BECh. 7 - Prob. 7.51BECh. 7 - Prob. 7.52QCh. 7 - Prob. 7.53QCh. 7 - Prob. 7.54QCh. 7 - Prob. 7.55QCh. 7 - Prob. 7.56QCh. 7 - Madison Corporation acquired a machine for 27,000...Ch. 7 - Prob. 7.58QCh. 7 - Prob. 7.59QCh. 7 - Prob. 7.60QCh. 7 - Prob. 7.61QCh. 7 - Prob. 7.62QCh. 7 - Prob. 7.63QCh. 7 - Prob. 7.64QCh. 7 - Prob. 7.65QCh. 7 - Prob. 7.66QCh. 7 - Prob. 7.67APCh. 7 - (Learning Objectives 1, 3: Measure and account for...Ch. 7 - (Learning Objectives 1, 3, 4: Measure and account...Ch. 7 - Prob. 7.70APCh. 7 - (Learning Objectives 1, 3, 4, 6, 8: An21yze plant...Ch. 7 - Prob. 7.72APCh. 7 - (Learning Objectives 1, 4, 8: Analyze the effect...Ch. 7 - Prob. 7.74APCh. 7 - (Learning Objectives 4, 8: Analyze the effect of a...Ch. 7 - Prob. 7.76BPCh. 7 - Prob. 7.77BPCh. 7 - Prob. 7.78BPCh. 7 - Prob. 7.79BPCh. 7 - Prob. 7.80BPCh. 7 - Prob. 7.81BPCh. 7 - (Learning Objectives 1, 4, 8: Analyze the effect...Ch. 7 - Prob. 7.83BPCh. 7 - Prob. 7.84BPCh. 7 - LO 3 (Learning Objective 3: Determine the effect...Ch. 7 - Prob. 7.86CEPCh. 7 - Prob. 7.87CEPCh. 7 - Prob. 7.88SCCh. 7 - Prob. 7.89DCCh. 7 - Prob. 7.90DCCh. 7 - Prob. 7.91EICCh. 7 - Prob. 1FFCh. 7 - Focus on Analysis Under Armour, Inc. LO 1, 3, 5,...
Knowledge Booster
Similar questions
- (Learning Objectives 1, 3, 8: Report plant assets, depreciation, and investing cashflows) On January 1, 2018, Little City Bar & Grill purchased a building, paying $58,000 cashand signing a $110,000 note payable. The company paid another $62,000 to remodel thebuilding. Furniture and fixtures cost $55,000, and dishes and supplies—a current asset—wereobtained for $9,400. All expenditures were for cash. Assume that all of these expendituresoccurred on January 1, 2018.Little City is depreciating the building over 25 years using the straight-line method, with anestimated residual value of $51,000. The furniture and fixtures will be replaced at the end of fiveyears and are being depreciated using the double-declining-balance method, with a residual valueof zero. At the end of the first year, the company still had dishes and supplies worth $1,300.Show what the company reported for supplies, plant assets, and cash flows at the end of thefirst year on its■ income statement,■ balance sheet,…arrow_forwardLearning Objectives 1, 3, 8: Report plant assets, depreciation, and investing cashflows) On January 1, 2018, Black Iron Bar & Grill purchased a building, paying $56,000cash and signing a $101,000 note payable. The company paid another $60,000 to remodel thebuilding. Furniture and fixtures cost $51,000, and dishes and supplies—a current asset—wereobtained for $9,600. All expenditures were for cash. Assume that all of these expendituresoccurred on January 1, 2018.Black Iron is depreciating the building over 25 years using the straight-line method, with anestimated residual value of $52,000. The furniture and fixtures will be replaced at the end of fiveyears and are being depreciated using the double-declining-balance method, with a residual valueof zero. At the end of the first year, the company still had dishes and supplies worth $1,600.Show what the company reported for supplies, plant assets, and cash flows at the end of thefirst year on its■ income statement,■ balance sheet, and■…arrow_forward(Learning Objectives 1, 3, 4: Measure a plant asset’s cost; calculate UOP depreciation; analyze the effect of a used asset trade-in) Concord Truck Company is a large truckingcompany. The company uses the units-of-production (UOP) method to depreciate its trucks.To follow are facts about one Mack truck in the company’s fleet. When this truck wasacquired in 2018, the tractor-trailer rig had cost $420,000 and was expected to remain in servicefor 10 years or 1,000,000 miles. Its estimated residual value was $100,000. During 2018, the truckwas driven 77,000 miles; during 2019, 175,000 miles; and during 2020, 190,000 miles. After thetruck was driven 45,000 miles in 2021, the company traded in the Mack truck for a Freightlinertruck with a fair market value of $270,000. In addition to the trade-in of the Mack truck, ConcordTruck Company paid cash of $31,000 for the Freightliner truck. Determine Concord’s gain or losson the transaction. Prepare the journal entry to record the trade-in of the…arrow_forward
- (Learning Objectives 1, 3, 4: Measure a plant asset’s cost; calculate UOPdepreciation; analyze the effect of a used asset trade-in) Canyon Truck Company is a largetrucking company. The company uses the units-of-production (UOP) method to depreciate itstrucks.To follow are facts about one Mack truck in the company’s fleet. When this truck wasacquired in 2018, the tractor-trailer had cost $450,000 and was expected to remain in servicefor 10 years or 1,000,000 miles. Its estimated residual value was $20,000. During 2018, thetruck was driven 80,000 miles; during 2019, 175,000 miles; and during 2020, 185,000 miles.After the truck was driven 40,000 miles in 2021, the company traded in the Mack truck fora Freightliner truck with a fair market value of $250,000. In addition to the trade-in of theMack truck, Canyon paid cash of $30,000 for the Freightliner truck. Determine Canyon’s gainor loss on the transaction. Prepare the journal entry to record the trade-in of the old truck for thenew one.…arrow_forwardE7-22A. (Learning Objective 1: Measure the cost of plant assets) Murphy Self Storagepurchased land, paying $160,000 cash as a down payment and signing a $185,000 note payablefor the balance. Murphy also had to pay delinquent property tax of $2,000, title insurance costing$6,000, and $11,000 to level the land and remove an unwanted building. The company paid$58,000 to add soil for the foundation and then constructed an office building at a cost of $700,000.It also paid $52,000 for a fence around the property, $11,000 for the company sign near theproperty entrance, and $3,000 for lighting of the grounds. What is the capitalized cost of eachof Murphy’s land, land improvements, and building?arrow_forward(Learning Objectives 1, 4: Allocate costs to assets acquired in a lump-sumpurchase; dispose of a plant asset) Sugar Ridge Manufacturing bought three used machines ina $167,000 lump-sum purchase. An independent appraiser valued the machines as shown:Machine No. Appraised Value123$ 38,25073,10058,650What is each machine’s individual cost? Immediately after making this purchase, Sugar Ridgesold Machine No. 3 for its appraised value. What is the result of the sale? (Round decimals to threeplaces when calculating proportions, and use your computed percentages in all calculations.)arrow_forward
- (Learning Objective 2: Distinguish capital expenditures from expenses) AssumeByron Athletic Products, Inc., purchased conveyor-belt machinery. Classify each ofthe following expenditures as a capital expenditure or an immediate expense related tomachinery:a. Purchase priceb. Installation of conveyor-belt machineryc. Special reinforcement to the machinery platformd. Ordinary repairs to keep the machinery in good working ordere. Lubrication of the machinery before it is placed in servicef. Sales tax paid on the purchase priceg. Major overhaul to extend the machinery’s useful life by four yearsh. Training of personnel for initial operation of the machineryi. Income tax paid on income earned from the sale of products manufactured by themachineryj. Periodic lubrication after the machinery is placed in servicek. Transportation and insurance while machinery is in transit from seller to buyerarrow_forward(Learning Objective 2: Distinguish capital expenditures from expenses) AssumeKaro Products, Inc., purchased conveyor-belt machinery. Classify each of the following expenditures as a capital expenditure or an immediate expense related to machinery:a. Periodic lubrication after the machinery is placed in serviceb. Special reinforcement to the machinery platformc. Major overhaul to extend the machinery’s useful life by five yearsd. Training of personnel for initial operation of the machinerye. Purchase pricef. Income tax paid on income earned from the sale of products manufactured by themachineryg. Ordinary repairs to keep the machinery in good working orderh. Transportation and insurance while machinery is in transit from seller to buyeri. Sales tax paid on the purchase pricej. Lubrication of the machinery before it is placed in servicek. Installation of the conveyor-belt machineryarrow_forward(Learning Objective 3: Compute and record depreciation after a change in usefullife of the asset) Fun Town Amusement Park paid $500,000 for a concession stand. Fun Townstarted out depreciating the building using the straight-line method over 25 years with a residualvalue of zero. After using the concession stand for four years, Fun Town determines that thebuilding will remain useful for only five more years. Record Fun Town’s depreciation on theconcession stand for year five using the straight-line method.arrow_forward
- Determining the cost of assets Learning Objective 1 Land $365,000 Lavallee Furniture purchased land, paying $95,000 cash plus a $260,000 note payable. In addition, Lavallee paid delinquent property tax of $3,000, title insurance costing $2,000, and $5,000 to level the land and remove an unwanted building. The company then constructed an office building at a cost of $450,000. It also paid $55,000 for a fence around the property, $16,000 for a sign near the entrance, and $7,000 for special lighting of the grounds. Requirements Determine the cost of the land, land improvements, and building. Which of these assets will Lavallee depreciate?arrow_forward(Learning Objectives 3, 4: Compute depreciation; record a gain or loss on disposal)On January 1, 2017, Stockton Manufacturing purchased a machine for $910,000. The companyexpected the machine to remain useful for eight years and to have a residual value of $80,000.Stockton Manufacturing uses the straight-line method to depreciate its machinery. StocktonManufacturing used the machine for four years and sold it on January 1, 2021, for $350,000.1. Compute accumulated depreciation on the machine at January 1, 2021 (same as December 31,2020).2. Record the sale of the machine on January 1, 2021arrow_forward(Learning Objectives 3, 4: Compute depreciation; record a gain or loss on disposal)On January 1, 2017, Lincoln Manufacturing purchased a machine for $930,000. The companyexpected the machine to remain useful for eight years and to have a residual value of $110,000.Lincoln Manufacturing uses the straight-line method to depreciate its machinery. LincolnManufacturing used the machine for four years and sold it on January 1, 2021, for $250,000.1. Compute accumulated depreciation on the machine at January 1, 2021 (same as December 31,2020).2. Record the sale of the machine on January 1, 2021.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education