Assume Karo Products, Inc., purchased conveyor-belt machinery. Requirement 1. 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 service b. Special reinforcement to the machinery platform c. Major overhaul to extend the machinery's useful life by five years

Assume Karo Products, Inc., purchased conveyor-belt machinery. Requirement 1. 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 service b. Special reinforcement to the machinery platform c. Major overhaul to extend the machinery's useful life by five years

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion

Section: Chapter Questions

Problem 7BCRQ

See similar textbooks

Similar questions

During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated five machines for $100,000 to improve efficiency in production of their remaining useful life of five years Low-cost repairs throughout the year totaled $70,000 Replaced a broken gear on a machine for $10,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?
Indicate which of the following costs should be expensed when incurred. a. $13,000 paid to rearrange and reinstall machinery. b. $200,000 paid for addition to building. c. $200 paid for tune-up and oil change on delivery truck. d. $7,000 paid to replace a wooden floor with a concrete floor. e. $2,000 paid for a major overhaul on a truck, which extends the useful life.
When depreciation is recorded each period, what account is debited? a. Depreciation Expense b. Cash c. Accumulated Depreciation d. The fixed asset account involved Use the following information for Multiple-Choice Questions 7-4 through 7-6: Cox Inc. acquired a machine for on January 1, 2019. The machine has a salvage value of $20,000 and a 5-year useful life. Cox expects the machine to run for 15,000 machine hours. The machine was actually used for 4,200 hours in 2019 and 3,450 hours in 2020.
In Year 1, Utica Machinery Company uses the asset from RE11-4 for 7,500 hours. Prepare the journal entry to record the depreciation.
A machine costing 350,000 has a salvage value of 15,000 and an estimated life of three years. Prepare depreciation schedules reporting the depreciation expense, accumulated depreciation, and book value of the machine for each year under the double-declining-balance and sum-of-the-years-digits methods. For the double-declining-balance method, round the depreciation rate to two decimal places.
Expenditures After Acquisition Listed below are several transactions: a. Paid $80 cash to replace a minor part of an air conditioning system. b. Paid $40,000 to fix structural damage to a building. c. Paid $8,000 for monthly salaries. d. Paid $12,000 to replace a manual cutting machine with a computer-controlled machine. e. Paid $1,000 related to the annual painting of a building. Required: Classify each transaction as either a revenue expenditure, a capital expenditure, or neither.
A building acquired at the beginning of the year at a cost of $1,630,000 has an estimated residual value of $340,000 and an estimated useful life of 10 years. Determine the following. a. The depreciable cost $fill in the blank 1 b. The straight-line rate fill in the blank 2 % c. The annual straight-line depreciation $fill in the blank 3 A truck acquired at a cost of $230,000 has an estimated residual value of $13,000, has an estimated useful life of 31,000 miles, and was driven 2,500 miles during the year. Determine the following. If required, round your answer for the depreciation rate to two decimal places. a. The depreciable cost $fill in the blank 1 b. The depreciation rate $fill in the blank 2 per mile c. The units-of-activity depreciation for the year $fill in the blank 3 A building acquired at the beginning of the year at a cost of $1,193,000 has an estimated residual value of $220,000 and an estimated useful life of 40 years. Determine the following.…
Hilarious Company provided the following data pertaining to machinery on the date of revaluation: CostReplacement cost Machinery 4, 500, 000 7, 200, 000 Accumulated depreciation 900, 000 Age of asset 3 years Revised Life of the asset 10 years Required: Appreciation or revaluation increase Carrying amount Depreciated replacement cost Revaluation surplus What is the original life of the asset? Prepare the journal entry to record the revaluation Prepare the entry to record the annual depreciation subsequent to revaluation Prepare the entry to record the piecemeal realization of the revaluation surplus
A company placed an asset into service on Day 1 of Year 1 with the following data related to the purchase: Cost of machinery Estimated salvage value Product life hours Useful life Hours used in Year 1 Which amount of annual depreciation expense should be recorded in the first year using the activity method? $3,000 $10,000 $15,000 $30,000 $225,000 $75,000 75,000 hours 5 years 5,000 hours
Oaktree Company purchased new equipment and made the following expenditures: Purchase price Sales tax Freight charges for shipment of equipment Insurance on the equipment for the first year Installation of equipment 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.) View transaction list Journal entry worksheet < 1 $50,000 2,700 750 958 1,500 2 Record the purchase of equipment.