Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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Chapter 7, Problem 72APSA
Expenditures After Acquisition
Pasta, a restaurant specializing in fresh pasta, installed a pasta cooker in early 2017 at a cost of $12,400. The cooker had an expected life of 5 years and a residual value of $900 when installed. As the restaurant’s business increased, it became apparent that renovations would be necessary so the cooker’s output could be increased. In January 2020, pasta $8,200 to install new heating equipment and $4,100 to add pressure-cooking capability. After these renovations, Pasta estimated that the remaining useful life of the cooker was 10 years and that the residual value was now $1,500.
Required:
1. Compute 1 year’s straight-line
2. Assume that 3 full years of straight-line depreciation expense had been recorded on the cooker before the renovations were made. Compute the book value of the cooker immediately after the renovations were made.
3. Compute 1 year’s straight-line depreciation expense on the renovated cooker.
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REMAX Ltd. purchased a warehouse on January 2, 2016, for $440,000. The straight-line method is used, and useful life is estimated to be 10 years, with a $40,000 residual value. At the beginning of 2022 REMAX spent $96,000 on major renovations. After the renovations, REMAX estimated that the useful life would be extended by 4 years, and the residual value would be $20,000.
Calculate the depreciation expense for 2022.
Depreciation Methods
Gruman Company purchased a machine for $220,000 on January 2, 2019. It made the following estimates:
Service life
5 years or 10,000 hours
Production
200,000 units
Residual value
$20,000
In 2019, Gruman uses the machine for 1,800 hours and produces 44,000 units. In 2020, Gruman uses the machine for 1,500 hours and produces 35,000 units. If required, round your final answers to the nearest
dollar.
Required:
1. Compute the depreciation for 2019 and 2020 under each of the following methods:
a. Straight-line method
2019 $
2020 $
b. Sum-of-the-years'-digits method
2019 $
2020 $
c. Double-declining-balance method
2019 $
2020 $
d. Activity method based on hours worked
2019 $
2020 $
e. Activity method based on units of output
Depreciation Methods
Gruman Company purchased a machine for $198,000 on January 2, 2019. It made the following estimates:
Service life
5 years or 10,000 hours
Production
180,000 units
Residual value
$ 18,000
In 2019, Gruman uses the machine for 1,700 hours and produces 45,000 units. In 2020, Gruman uses the machine for 1,200 hours and produces 32,000 units. If required, round your final answers to the nearest dollar.
For each method, what is the book value of the machine at the end of 2019? At the end of 2020?
Straight-line method
2019
$ fill in the blank
2020
$ fill in the blank
Sum-of-the-years'-digits method
2019
$ fill in the blank
2020
$ fill in the blank
Double-declining-balance method
2019
$ fill in the blank
2020
$ fill in the blank
Activity method based on hours worked
2019
$ fill in the blank
2020
$ fill in the blank
Activity method based on units of output
2019
$ fill in the blank
2020
$ fill in the blank
Chapter 7 Solutions
Cornerstones of Financial Accounting
Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - How does the cost concept affect accounting for...Ch. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - What factors must be known or estimated in order...Ch. 7 - How do the accelerated and straight-line...Ch. 7 - Prob. 9DQCh. 7 - Prob. 10DQ
Ch. 7 - Prob. 11DQCh. 7 - Prob. 12DQCh. 7 - Prob. 13DQCh. 7 - Prob. 14DQCh. 7 - Prob. 15DQCh. 7 - Prob. 16DQCh. 7 - Prob. 17DQCh. 7 - Prob. 18DQCh. 7 - Prob. 1MCQCh. 7 - Prob. 2MCQCh. 7 - When depreciation is recorded each period, what...Ch. 7 - Prob. 4MCQCh. 7 - Refer to the information for Cox Inc. above. What...Ch. 7 - Refer to the information for Cox Inc. above. What...Ch. 7 - Which of the following statements is true...Ch. 7 - Normal repair and maintenance of an asset is an...Ch. 7 - Chapman Inc. purchased a piece of equipment in...Ch. 7 - Bradley Company purchased a machine for $34,000 on...Ch. 7 - Prob. 11MCQCh. 7 - Which of the following statements is true? a. The...Ch. 7 - Prob. 13MCQCh. 7 - Heston Company acquired a patent on January 1,...Ch. 7 - Prob. 15MCQCh. 7 - ( Appendix 7 A) Murnane Company purchased a...Ch. 7 - Prob. 17CECh. 7 - Prob. 18CECh. 7 - Straight-Line Depreciation Refer to the...Ch. 7 - Prob. 20CECh. 7 - Prob. 21CECh. 7 - Revision of Depreciation On January 1, 2017, Slade...Ch. 7 - Disposal of an Operating Asset On August 30,...Ch. 7 - Prob. 24CECh. 7 - Cost of Intangible Assets Advanced Technological...Ch. 7 - Prob. 26CECh. 7 - Prob. 27CECh. 7 - (Appendix 7A) Impairment Brown Industries had two...Ch. 7 - Prob. 29BECh. 7 - Acquisition Cost Desert State University installed...Ch. 7 - Depreciation Concepts Listed below are concepts...Ch. 7 - Depreciation Methods On January 1, 2019, Loeffler...Ch. 7 - Expenditures After Acquisition Listed below are...Ch. 7 - Revision of Depreciation On January 1, 2019, the...Ch. 7 - Disposal of an Operating Asset Jolie Company owns...Ch. 7 - Analyzing Fixed Assets Pitt reported the following...Ch. 7 - Prob. 37BECh. 7 - Prob. 38BECh. 7 - ( Appendix 7A) Impairment Listed below is...Ch. 7 - Prob. 40ECh. 7 - Prob. 41ECh. 7 - Prob. 42ECh. 7 - Prob. 43ECh. 7 - Cost of a Fixed Asset Colson Photography Service...Ch. 7 - Prob. 45ECh. 7 - Cost and Depreciation On January 1, 2019, Quick...Ch. 7 - Characteristics of Depreciation Methods Below is a...Ch. 7 - Prob. 48ECh. 7 - Depreciation Methods Clearcopy, a printing...Ch. 7 - Depreciation Methods Quick-as-Lightning, a...Ch. 7 - Inferring Original Cost Barton Construction...Ch. 7 - Choice Among Depreciation Methods Walnut Ridge...Ch. 7 - Revision of Depreciation On January 1, 2017,...Ch. 7 - Capital versus Revenue Expenditure Warrick Water...Ch. 7 - Expenditures After Acquisition The following...Ch. 7 - Expenditures After Acquisition Roanoke...Ch. 7 - Prob. 57ECh. 7 - Prob. 58ECh. 7 - Disposal of Fixed Asset Pacifica Manufacturing...Ch. 7 - Prob. 60ECh. 7 - Prob. 61ECh. 7 - Prob. 62ECh. 7 - Balance Sheet Presentation The following...Ch. 7 - Prob. 64ECh. 7 - Prob. 65ECh. 7 - Prob. 66ECh. 7 - Prob. 67ECh. 7 - Financial Statement Presentation of Operating...Ch. 7 - A Cost of a Fixed Asset Mist City Car Wash...Ch. 7 - Depreciation Methods Hansen Supermarkets purchased...Ch. 7 - Depreciation Schedules Wendt Corporation acquired...Ch. 7 - Expenditures After Acquisition Pasta, a restaurant...Ch. 7 - Prob. 73APSACh. 7 - Prob. 74APSACh. 7 - Prob. 75APSACh. 7 - Prob. 76APSACh. 7 - Prob. 68BPSBCh. 7 - Cost of a Fixed Asset Metropolis Country Club...Ch. 7 - Depreciation Methods Graphic Design Inc. purchased...Ch. 7 - Depreciation Schedules Dunn Corporation acquired a...Ch. 7 - Prob. 72BPSBCh. 7 - Prob. 73BPSBCh. 7 - Prob. 74BPSBCh. 7 - Prob. 75BPSBCh. 7 - Prob. 76BPSBCh. 7 - Prob. 77.1CCh. 7 - Prob. 77.2CCh. 7 - Prob. 78.1CCh. 7 - Prob. 78.2CCh. 7 - Prob. 79.1CCh. 7 - Prob. 79.2CCh. 7 - Prob. 79.3CCh. 7 - Prob. 80.1CCh. 7 - Prob. 80.2CCh. 7 - Prob. 80.3CCh. 7 - Prob. 80.4CCh. 7 - Prob. 80.5CCh. 7 - Prob. 80.6CCh. 7 - Prob. 80.7CCh. 7 - Prob. 80.8CCh. 7 - Comparative Analysis: Under Armour, Inc., versus...Ch. 7 - Prob. 81.2CCh. 7 - Comparative Analysis: Under Armour, Inc., versus...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...
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