Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 11, Problem 4PB
During the current year, Arkells Inc. made the following expenditures relating to plant machinery.
• Renovated seven machines for $250,000 to improve efficiency in production of their remaining useful life of eight years
• Low-cost repairs throughout the year totaled $79,000
• Replaced a broken gear on a machine for $6,000
A. What amount should be expensed during the period?
B. What amount should be capitalized during the period?
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During the current year, Arkells Inc. made the following expenditures relating to plant machinery. • Renovated seven machines for $250,000 to improve efficiency in production of their remaining useful life of eight years • Low-cost repairs throughout the year totaled $79,000 • Replaced a broken gear on a machine for $6,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?
During 2006, Fox company made the following expenditures relating to plant machinery and equipment. Renovation of a group of machines at a cost of $50,000 to secure greater efficiency in production over their remaining 5- year useful lives. The project was completed on December 31, 2006. Continuing, frequent, and low cost repairs at a cost of $35,000. A broken gear on a machine was replaced at a cost of $5,000. What total amount should be charged to repairs and maintenance in 2006?
A. $35,000
B. $40,000
C. $85,000
D. $90,000
Western Wholesale Foods incurs the following expenditures during the current fiscal year. How should Western account for each of these expenditures?
Capitalize and depreciate over the useful life of the asset.
OR
Expense in the period incurred.
1.
Salaries for the repair technicians, $154,000
2.
Remodeling of the executive offices, $84,700
3.
Annual maintenance costs related to its machinery, $70,400
4.
Improvement of the production line resulting in an increase in productivity, $33,800
5.
Addition of a sprinkler system to the manufacturing facility to reduce the risk of fire damage, $37,900
Chapter 11 Solutions
Principles of Accounting Volume 1
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