Financial & Managerial Accounting
13th Edition
ISBN: 9781285866307
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 1.1BPE
To determine
Cost concept: This is an accounting concept which states that the actual cost paid in receipt of the asset is the reliable measure and hence assets and services should be recorded at actual cost or historical cost.
To describe: The recording of purchase of land in the books of HR Service
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Cost principleOn June 25, Ritts Roofing extended an offer of $250,000 for land that hadbeen priced for sale at $300,000. On July 9, Ritts accepted the seller'scounteroffer of $275,000. On October 1, the land was assessed at a valueof $280,000 for property tax purposes. On December 22, Ritts wasoffered $305,000 for the land by a national retail chain. At what valueshould the land be recorded in Ritts Roofing's records?
In a cost center, the manager has responsibility and authority for making decisions that affect
a. costs
b. investments in assets
c. both costs and revenues
d. revenues
Keating Co. is considering disposing of equipment with a cost of $68,000 and accumulated depreciation of $47,600. Keating Co. can sell the equipment through a broker for $27,000 less 8% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $46,000. Keating will incur repair, insurance, and property tax expenses estimated at $10,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is
a. $11,160
b. $7,812
c. $16,740
d. $13,392
If sales are $828,000, variable costs are 68% of sales, and operating income is $278,000, what is the contribution margin ratio?
a. 64%
b. 36%
c. 68%
d. 32%
-Qdinson Company purchased a tract of land for P 12,000,000. The entity incurred
additional cost of P 3,000,000 during the remainder of the year in preparing the land
for sale. The tract of land was subdivided into residential lots.
Number of Lots
Sales Price per Lot
P 240,000
160,000
100,000
Lot Class
A
100
B
100
200
Using the relative sales price method, what amount should be allocated to Class A
Lots?
A. P3,000,000
В. Р 3,750,000
C. P6,000,000
D. P7,200,000
Chapter 1 Solutions
Financial & Managerial Accounting
Ch. 1 - Name some users of accounting information.Ch. 1 - Prob. 2DQCh. 1 - Prob. 3DQCh. 1 - Prob. 4DQCh. 1 - On July 12, Reliable Repair Service extended an...Ch. 1 - Prob. 6DQCh. 1 - Describe the difference between an account...Ch. 1 - A business had revenues of 679,000 and operating...Ch. 1 - Prob. 9DQCh. 1 - The financial statements are interrelated. What...
Ch. 1 - Prob. 1.1APECh. 1 - Prob. 1.1BPECh. 1 - Accounting equation Dream-It LLC is a motivational...Ch. 1 - Prob. 1.2BPECh. 1 - Transactions Arrowhead Delivery Service is owned...Ch. 1 - Transactions Interstate Delivery Service is owned...Ch. 1 - Prob. 1.4APECh. 1 - Prob. 1.4BPECh. 1 - Prob. 1.5APECh. 1 - Prob. 1.5BPECh. 1 - Balance sheet Using the following data for Ousel...Ch. 1 - Prob. 1.6BPECh. 1 - Prob. 1.7APECh. 1 - Prob. 1.7BPECh. 1 - Prob. 1.8APECh. 1 - Prob. 1.8BPECh. 1 - Types of businesses The following is a list of...Ch. 1 - Prob. 1.2EXCh. 1 - Prob. 1.3EXCh. 1 - Prob. 1.4EXCh. 1 - Prob. 1.5EXCh. 1 - Prob. 1.6EXCh. 1 - Prob. 1.7EXCh. 1 - Asset, liability, and stockholders equity items...Ch. 1 - Effect of transactions on accounting equation What...Ch. 1 - Effect of transactions on accounting equation A. A...Ch. 1 - Effect of transactions on stockholders equity...Ch. 1 - Transactions The following selected transactions...Ch. 1 - Nature of transactions Teri West operates her own...Ch. 1 - Net income and dividends The income statement for...Ch. 1 - Prob. 1.15EXCh. 1 - Balance sheet items From the following list of...Ch. 1 - Income statement items From the following list of...Ch. 1 - Prob. 1.18EXCh. 1 - Income statement Dairy Services was organized on...Ch. 1 - Missing amounts from balance sheet and income...Ch. 1 - Prob. 1.21EXCh. 1 - Financial statements Each of the following items...Ch. 1 - Statement of cash flows Indicate whether each of...Ch. 1 - Prob. 1.24EXCh. 1 - Prob. 1.25EXCh. 1 - Ratio of liabilities to stockholders' equity The...Ch. 1 - Prob. 1.27EXCh. 1 - Transactions On April 1 of the current year,...Ch. 1 - Financial statements The amounts of the assets and...Ch. 1 - Financial statements Seth Feye established...Ch. 1 - Prob. 1.4APRCh. 1 - Transactions; financial statements DLite Dry...Ch. 1 - Prob. 1.6APRCh. 1 - Transactions Amy Austin established an insurance...Ch. 1 - Prob. 1.2BPRCh. 1 - Financial statements Jose Loder established Bronco...Ch. 1 - Prob. 1.4BPRCh. 1 - Prob. 1.5BPRCh. 1 - Missing amounts from financial statements The...Ch. 1 - Peyton Smith enjoys listening to all types of...Ch. 1 - Prob. 1.1CPCh. 1 - Prob. 1.2CPCh. 1 - Prob. 1.3CPCh. 1 - Prob. 1.6CP
Knowledge Booster
Similar questions
- Cost ConceptT On February 3, Gallatin Repair Service extended an offer of $152,000 for land that had been priced for sale at $173,000. On February 28, Gallatin Repair Service accepted the seller's counteroffer of $165,000. On October 23, the land was assessed at a value of $248,000 for property tax purposes. On January 15 of the next year, Gallatin Repair Service was offered $264,000 for the land by a national retail chain. At what value should the land be recorded in Gallatin Repair Service's records?arrow_forwardDoran Realty Company purchased a plot of ground for P800, 000 and spent P2, 100, 000 in developing it for building lots. The lots were classified int Midland, and Lowland grades, to sell at P100, 000, P75, 000, and P50, 000 each, respectively. Complete the table below to allocate the cost of the lots using a relative sales value method. Grade No. of Lots Selling Price Total Revenue % of Total Sales Apportioned Cost Total Per Lot Highland 20 Midland 40 Lowland 100 Total 160arrow_forwardChico Company paid $600,000 for a basket purchase that included office furniture, a building and land. An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Office furniture, $160,000; Building, $500,000; and Land, $130,000. Based on this information, what is the cost that should be allocated to the office furniture? Note: Round intermediate percentage values to a whole percentage. Multiple Choice $235,562 $66,500 $160,000 $120,000arrow_forward
- Your Question: Hua Fat Technology Ltd Case Hua Fat Technology Ltd (Hua Fat) is a global telecommunication equipment manufacturer. The company was granted a piece of land by the government to develop its 5G business. On 1st January 2018, the company started to construct a property at the site. The property was used as a testing laboratory (the laboratory) to serve the company’s customers. The construction costs relating to the laboratory were: $000 Cost of construction materials before trade discount of 10% 50,000 Salary of construction workers for six months to 30 June 2018 4,800 Overheads related to the construction 3,600 Payment to external consultants related to the construction 2,000 Expected dismantling and restoration costs (note 3) 400 Notes: Hua Fat…arrow_forwardTransactions for the first 3-month period of calendar year 2021 for Sta Cruz Branch of XYZ Company. Home Office put up a branch with initial investment of cash 400,000; and equipment 180,000, and furniture & fixtures, 100,000, both to be booked in the branch. Home office purchased equipment for use by the branch and to be carried in the Home Office books. Acquisition cost is 80,000. Branch purchased 160,000 worth of merchandise for 50% cash and balance on account. Delivery charge of 3,000 paid by the branch. Home Office ordered office table and chairs worth 20,000 to be carried in branch books. The branch paid cash for the items upon delivery directly to the branch. Delivery charge of 800 was also paid by the branch. Branch purchased computers and printers worth 110,000 for use of the branch and to be booked in the Home Office. Home Office transferred merchandise worth 320,000. Home Office paid for the freight of 5,000 to be taken up in branch books. Branch total sales to date on…arrow_forwardFalther Inc. acquired a new processing machine: Invoice cost P1,800,000 Transportation cost 50,000 Installation cost 120,000 The purchase agreement stipulated that if payment is made within 10 days, the entity will receive a 5% discount. However, the entity paid after the discount time had expired. The new entity's main engineer spent two-thirds of his time on the new machine's trial run. The remuneration is P90,000 per month. The company requested for an allowance from the supplier since the machine's performance was below par. A cash allowance of P100,000 was issued by the supplier. The cost of uninstalling the old machine before installing the new unit was P10,000. 1. What amount of should be recorded as cost of the new machine?arrow_forward
- On December 31 Y1, the Company ARL develop a Product: Master 3D. The disbursement associate to the Product are the following: Research $6,000,000 and Development $4,000,000. The criteria have been met for recognition of the development costs as an asset. Product Master D will be in the market in Year 2 and is expected to marketable for 5 years. Total sales of the product are estimated at $100,000,000. Instructions: Using IAS 38, determine the effect of the Research & Development costs have on Company’s Net Income. Answer the following questions. 1. Choose one and explain Net Income using IFRS will be in Year 1: a. Higher by $________ larger than U.S. GAAP income. b. Lower by $________ larger than U.S. GAAP income. c. Both will be the same. 2. Explanation: 3. Year 3 (ending balance) Determine the Book Value of the asset 4. Explanation: Show you computations.arrow_forwardOn December 31 Y1, the Company ARL develop a Product: Master 3D. The disbursement associate to the Product are the following: Research $6,000,000 and Development $4,000,000. The criteria have been met for recognition of the development costs as an asset. Product Master D will be in the market in Year 2 and is expected to marketable for 5 years. Total sales of the product are estimated at $100,000,000. Instructions: Using IAS 38, determine the effect of the Research & Development costs have on Company’s Net Income. Answer the following questions. 1. Choose one and explain Net Income using IFRS will be in Year 1: a. Higher by $________ larger than U.S. GAAP income. b. Lower by $________ larger than U.S. GAAP income. c. Both will be the same. 2. Explanation: 3. Year 3 (ending balance) Determine the Book Value of the asset 4. Explanation:arrow_forwardChicago Heights company has 2 year contract to construct a warehouse. The contract value is 2949 and the estimated total cost is 1156. During the next 2 years, the costs are incurred as follows and the project is completed by the end of second year. Contract data Year for the year 2019 for the year 2020 Cost incurred 867$ 851$ Required Make the recognition of revenue, expenses and profits for 2020. Type in the profit value without using the currency sign and separators.arrow_forward
- Kemp Inc. acquired a new processing machine: P1,800,000 Invoice cost Transportation cost 50,000 Installation cost 120,000 The purchase agreement stipulated that if payment is made within 10 days, the entity will receive a 5% discount. However, the entity paid after the discount time had expired. The new entity's main engineer spent two-thirds of his time on the new machine's trial run. The remuneration is P90,000 per month. The company requested for an allowance from the supplier since the machine's performance was below par. A cash allowance of P100,000 was issued by the supplier. The cost of uninstalling the old machine before installing the new unit was P10,000. a. P1,800,000 b. P1,840,000 c. P1,870,000 d. P1,780,000arrow_forwardSituation 2: Malcolm Limited acquired a truck to deliver and install its specialized products at the customer's site. The vehicle's list price was $135,000, but customization added another $30,000 in costs. Malcolm took delivery of the truck on September 30, 2020, with a down payment of $15,000, signing a four-year, 8.0% note for the remainder, payable in equal payments of $43,488 beginning September 30, 2021. Malcolm expected the truck to be usable for 500 deliveries and installations. After that, the product's technology would have changed and made the vehicle obsolete. In late July 2023, the truck was destroyed when a concrete garage collapsed. Malcolm used the truck for 45 deliveries in 2020, 125 in 2021, 134 in 2022, and 79 in 2023. The company received a cheque for $12,000 from the insurance company and paid what remained on the note. Required #2: Prepare all entries that are needed to record the events and activities related to the truck, the note, and its interest, including…arrow_forwardRiverboat Adventures pays $310,000 plus $15,000 in closing costs to purchase real estate. The real estate consists of land appraised at $35,000, a building appraised at $105,000, and land improvements appraised at $210,000. Compute the cost that should be allocated to the building. Multiple Choice $97,500. $105,000. $89,178. $140,000. $93,000.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning