Hardev Cullumber paid $48,000 to replace part of the factory floor. The floor had been capitalized as part of the factory building when itwas purchased ten years previously and was not considered a separate component. When purchased, the building had beenassumed to have a 30-year useful life and was being depreciated on a straight-line basis. At the time of the floor replacement, thebuilding had been depreciated for 10 years. Cullumber estimated that the original cost of the floor would have been 15% cheaperthan the new replacement, due to inflation.Prepare the journal entries to record these transactions, assuming Cullumber follows IFRS. (Credit account titles are automaticallyindented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O forthe amounts. List all debit entries before credit entries.)

Cullumber's decision to replace a portion of its factory floor prompts several accounting…

Answered: Cullumber paid $48,000 to replace part…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 7PB: Tree Lovers Inc. purchased 2,500 acres of woodland in which it intends to harvest the complete...

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Tree Lovers Inc. purchased 2,500 acres of woodland in which it intends to harvest the complete forest, leaving the land barren and worthless. Tree Lovers paid $5,000,000 for the land. Tree Lovers will sell the lumber as it is harvested and it expects to deplete it over ten years (150 acres in year one, 300 acres in year two, 250 acres in year three, 150 acres in year four, and 100 acres in year five). Calculate the depletion expense for the next five years and create the journal entry for year one.
Cullumber paid $48,000 to replace part of the factory floor. The floor had been capitalized as part of the factory building when it was purchased ten years previously and was not considered a separate component. When purchased, the building had been assumed to have a 30-year useful life and was being depreciated on a straight-line basis. At the time of the floor replacement, the building had been depreciated for 10 years. Cullumber estimated that the original cost of the floor would have been 15% cheaper than the new replacement, due to inflation. Prepare the journal entries to record these transactions, assuming Cullumber follows IFRS. (Credit account titles are automatically indented when the 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. List all debit entries before credit entries.)
Padre, Inc., purchased a used piece of heavy equipment for $25,000. Delivery of the equipmentto Padre’s business site cost $750. Expenditures to recondition the equipment and prepare it foruse totaled $2,230. The maintenance for the first year Padre owned the equipment was $1,200.Determine the cost that is the basis for calculating annual depreciation on the equipment.
Cominsky Company purchased a machine on July 1, 2021, for $28,000. Cominsky paid $200 in title fees and county property tax of $125 on the machine. In addition, Cominsky paid $500 shipping charges for delivery, and $475 was paid to a local contractor to build and wire a platform for the machine on the plant floor. The machine has an estimated useful life of 6 years with a salvage value of $3,000. Determine the depreciation base of Cominsky’s new machine. Cominsky uses straight-line depreciation.
Bonita Company purchased a machine on July 1, 2021, for $30,520. Bonita paid $218 in title fees and county property tax of $136 on the machine. In addition, Bonita paid $545 shipping charges for delivery, and $518 was paid to a local contractor to build and wire a platform for the machine on the plant floor. The machine has an estimated useful life of 6 years with a salvage value of $3,270. Determine the depreciation base of Bonita's new machine. Bonita uses straight-line depreciation. Depreciation base 24
Wetherby purchased a machine on 1 July 20X7 for $500,000. It is being depreciated on a straight line basis over its expected life of ten years. Residual value is estimated at $20,000. On 1 January 20X8, following a change in legislation, Wetherby fitted a safety guard to the machine. The safety guard cost $25,000 and has a useful life of five years with no residual value. What amount will be charged to profit or loss for the year ended 31 March 20X8 in respect of depreciation on this machine?
Vaughn Company purchased a machine on July 1, 2021, for $32,200. Vaughn paid $230 in title fees and county property tax of $144 on the machine. In addition, Vaughn paid $575 shipping charges for delivery, and $546 was paid to a local contractor to build and wire a platform for the machine on the plant floor. The machine has an estimated useful life of 6 years with a salvage value of $3,450.Determine the depreciation base of Vaughn’s new machine. Vaughn uses straight-line depreciation. Depreciation base
Sequoia purchased the rights to cut timber on several tracts of land over a 15-year period. It paid $514,000 for cutting rights. A timber engineer estimates that 514,000 board feet of timber will be cut. During the current year, Sequoia cut 59,000 board feet of timber, which it sold for $914,000. What is Sequoia's cost depletion deduction for the current year?
Sage Ltd. owned several manufacturing facilities. On September 15 of the current year, Sage decided to sell one of its manufacturing buildings. The building had cost $6,325,000 when originally purchased 5 years ago, and had been depreciated using the straight-line method with no residual value. Sage estimated that the building had a 25-year life when purchased. Prepare the journal entry to record the sale of the building on Sage's books, assuming 5 years of depreciation has already been recorded in the accounts to the date of disposal. The building was sold for $5,250,000 cash. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Sept. 15 List of Accounts…
Wildhorse Ltd. owned several manufacturing facilities. On September 15 of the current year, Wildhorse decided to sell one of its manufacturing buildings. The building had cost $7,920,000 when originally purchased 7 years ago, and had been depreciated using the straight-line method with no residual value. Wildhorse estimated that the building had a 30-year life when purchased. Prepare the journal entry to record the sale of the building on Wildhorse's books, assuming 7 years of depreciation has already been recorded in the accounts to the date of disposal. The building was sold for $6,302,000 cash. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Sept. 15 List of Accounts…
Silver Company purchased a machine for use in the business. The purchase price was $55,000 and the related sales tax totaled $500. Sliver paid $1,000 to have the machine delivered to its factory and $2,000 to have it assembled. Over the five-year life of the machine, maintenance cost of $800 will be incurred annually. What is the capitalized cost of this asset? Manning Company purchased a factory for $120,000. The factory included land, a building, and equipment. The land contributes 40.8%, the building contributes 49.6%, and the equipment contributes 9.6% of the factory’s value. How much of the cost should be assigned to the building? On January 1, Year 1, the Starshina Company paid $25,000 for a photocopier with an estimated useful life of 4 years, and an estimated residual value of $5,000. The company uses the straight-line method. What is the amount of depreciation expense for Year 2?
The Johnson Company bought a truck costing $24,000 two and a half years ago. The truck's estimated life was four years at the time of purchase. It was accounted for by using straight line depreciation with zero salvage value. The truck was sold yesterday for $19,000. What taxable gain must be reported on the sale of the truck?

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