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Benedict Company incurred the following costs. Indicate to which account Benedict would debit each of the
costs.
No.
Transactions
Amount
Account
1.
Sales tax on factory machinery purchased
$5,000
Insurance Expense
2.
Painting of and lettering on truck
immediately upon purchase
700
Prepaid Insurance
3.
Installation and testing of factory
machinery
2,000
Architect's Fees
4.
Real estate broker's commission on land
purchased
3,500
Architect's Fees
5.
Insurance premium paid for first year's
insurance on new truck
880
Equipment
6.
Cost of landscaping on property purchased
7,200
Insurance Expense
7.
Cost of paving parking lot for new building
constructed
17,900
Prepaid Insurance
8.
Cost of clearing, draining, and filling land
13,300
Buildings
9.
Architect's fees on self-constructed
building
10,000
Land Improvements
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X Your answer is incorrect.
Benedict Company incurred the following costs. Indicate to which account Benedict would debit each of the
costs.
No.
Transactions
Amount
Account
1.
Sales tax on factory machinery purchased
$ 5,000
Insurance Expense
2.
Painting of and lettering on truck
immediately upon purchase
700
Prepaid Insurance
3.
3
Installation and testing of factory
machinery
2,000
Architect's Fees
4.
Real estate broker's commission on land
purchased
3,500
Architect's Fees
5.
Insurance premium paid for first year's
insurance on new truck
880
Equipment
.
6.
Cost of landscaping on property purchased
7,200
Insurance Expense
7.
Cost of paving parking lot for new building
constructed
17,900
Prepaid Insurance
8.
Cost of clearing, draining, and filling land
13,300
Buildings
9.
Architect's fees on self-constructed
building
10,000
Land Improvements
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On March 1, 2020, Pharoah Company acquired real estate on which it planned to construct a small office
building. The company paid $ 95,000 in cash. An old warehouse on the property was razed at a cost of $
8,900; the salvaged materials were sold for $ 1,600. Additional expenditures before construction began
included $ 1,900 attorney's fee for work concerning the land purchase, $ 5,500 real estate broker's fee, $
7,200 architect's fee, and $ 14,700 to put in driveways and a parking lot.
(a)
Determine the amount to be reported as the cost of the land.
Cost of land
$
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Metlock, Inc. sells equipment on September 30, 2020, for $16,700 cash. The equipment originally cost
$74,300 and as of January 1, 2020, had accumulated depreciation of $42,600. Depreciation for the first 9
months of 2020 is $5,350.
Prepare the journal entries to (a) update depreciation to September 30, 2020, and (b) record the sale of the
equipment. (Credit account titles are automatically indented when amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the account titles and enter O for the
amounts.)
No. Account Titles and Explanation
Debit
Credit
(a)
(b)
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X This is the computation for book value.
Depreciable cost is the
cost of an asset less accumulated depreciation.
book value of an asset less its salvage value.
O cost of an asset less its salvage value.
O book value of an asset.
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The cost of land includes all of the following except
accrued property taxes.
O closing costs.
Oreal estate brokers' commissions.
O parking lots.
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Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as
ordinary repairs.
expense expenditures.
revenue expenditures.
O capital expenditures.
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If a plant asset is sold before it is fully depreciated,
only a gain on disposal can occur.
only a loss on disposal can occur.
O either a gain or a loss can occur.
O neither a gain nor a loss can occur.
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Presented below are selected transactions at Pina Colada Corp. for 2020.
Jan.
1
Retired a piece of machinery that was purchased on January 1, 2010. The machine cost $
63,600 on that date. It had a useful life of 10 years with no salvage value.
June
30
Sold a computer that was purchased on January 1, 2017. The computer cost $ 41,400. It
had a useful life of 5 years with no salvage value. The computer was sold for $ 14,800.
Dec.
31
Discarded a delivery truck that was purchased on January 1, 2016. The truck cost $
41,220. It was depreciated based on a 6-year useful life with a $3,000 salvage value.
Journalize all entries required on the above dates, including entries to update depreciation, where
applicable, on assets disposed of. Pina Colada Corp. uses straight-line depreciation. (Assume depreciation is
up to date as of December 31, 2019.) (Credit account titles are automatically indented when amount is
entered. Do not indent manually. Record journal entries in the order presented in the problem. If no
entry is required, select "No Entry" for the account titles and enter O for the amounts. Do not round
intermediate calculations.)
Date
Account Titles and Explanation
Debit
Crec
(To record depreciation to date of disposal)
June 30
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(To record depreciation to date of disposal)
June 30
Jan. 1
June 30
Dec. 31
:)
(To record depreciation to date of disposal)
Dec. 31
(To record retirement of truck)
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(To record depreciation to date of disposal)
(To record sale of computer)
(To record depreciation to date of disposal)
(To record retirement of truck)
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Explain how to account for the disposal of plant assets.
Companies dispose of plant assets that are no longer useful to them. Illustration 9.18 shows the three
ways in which companies make plant asset disposals.
Piper Co.
Lowy Co
Piper Co.
Lowy Co.
$
Retirement
Equipment is scrapped
or discarded.
Sale
Equipment is sold
to another party
Exchange
Existing equipment is traded
for new equipment.
ILLUSTRATION 9.18 Methods of plant asset disposal
Whatever the disposal method, the company must determine the book value of the plant asset at the
disposal date to determine the gain or loss. Recall that the book value is the difference between the cost
of the plant asset and the accumulated depreciation to date. If the disposal does not occur on the first day
of the year, the company must record depreciation for the fraction of the year to the date of disposal. The
company then eliminates the book value by reducing (debiting) Accumulated Depreciation for the total
depreciation associated with that asset to the date of disposal and reducing (crediting) the asset account
for the cost of the asset.
In this chapter, we examine the accounting for the retirement and sale of plant assets. In the appendix to
the chapter, we discuss and illustrate the accounting for exchanges of plant assets.
Retirement of Plant Assets
To illustrate the retirement of plant assets, assume that Hobart Company retires its computer printers,
which cost $32,000. The accumulated depreciation on these printers is $32,000. The equipment,
therefore, is fully depreciated (zero book value). The entry to record this retirement is as follows (see
Helpful Hint).
HELPFUL HINT
When disposing of a plant asset, the company removes all amounts related to the asset. This
includes the original cost in the asset account and the total depreciation to date in the accumulated
depreciation account.
32,000
Accumulated Depreciation - Equipment
Equipment
(To record retirement of fully depreciated equipment)
32,000
+
SE
A
+32,000
-32,000
Cash Flows
no effect
What happens if a fully depreciated plant asset is still useful to the company? In this case, the asset and
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Assignment Details
ACC-001A-70049 Financial Accounting
Managerial Accounting
Discussion Board: Chapter 20 >
and Prior Content + Administ...
Due Friday, October 29, 2021 at 11:59 PM
Submission Types
Discussion Comment
Submission & Rubric
>
ACC-001A-70049
Financial Accounting
Valuing Long term assets
Due Today at 11:59 PM
Description
Dz
Dina Aburous
Oct 20, 2021 at 10:57 AM
ACC-001A-70049
Financial Accounting
Chapter 9 Homework
Due Today at 11:59 PM
BUS-028A-70066 Business Law |
Discussion Question 4
Due Friday, November 5, 2021 at 11:59 PM
Under GAAP a building (e.g. $1,000,000) is initially
recorded at cost and depreciated over time. If during
its life the fair market value of the building drops (let's
say to $800,000) the company reduces the value of
the asset and records the $200,000 as an unrealized
loss (in the statement of comprehensive income).
However, if the fair market value increases the value
on the books remains at cost or 1,000,000 and no
gain is recorded. Does this remind you of something?
(hint chapter 6).
险
BUS-0282-70066 Business Law |
Homework Assignment for
Chapter 16
Due Friday, November 5, 2021 at 11:59 PM
BUS-028A-70066 Business Law |
IRAC Assignment 3
Due Friday, November 5, 2021 at 11:59 PM
However, under IFRS (which most the world uses)
similar assets can be valued either similar to GAAP or
at fair market value. If an organization chooses fair
market value then it will have to adjust the value of
the asset up or down (as long as there is a reliable
market value).
Dz
ACC-001B-70054
Managerial Accounting
Chapter 21 Homework
Due Saturday, November 6, 2021 at 11:59...
ACC-001B-70054
Managerial Accounting
Chapter 21: Adaptive Practice
Due Saturday, November 6, 2021 at 11:59...
Here's the question: Lets take two companies, one in
the US and applies GAAP. and another in Singapore
and it applies the revaluation model according to
IFRS. If you are comparing the financial statements of
these companies (over the last couple of years) what
differences would you expect to see as a result of the
different valuation methods used for valuing a
building? think of multiple scenarios (prices going up
or down)
ACC-001B-70054
Managerial Accounting
Discussion Board: Chapter 21 >
and Prior Content + Administ...
Due Saturday, November 6, 2021 at 11:59...
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