Exercise 8-18A Effect of revenue expenditures versus capital expenditures on financial statements 8 LO 8. On January 1, Year 1. Webb Construction Company overhauled four cranes, resulting in a slight increase in the life of the cranes. overhauls occur regularly at two-year intervals and have been treated as a maintenance expense in the pest. Management is considering whether to capitalize this years $29,460 cash cost in the Cranes asset account or to expense it as a maintenance expense. Assume that the cranes have a remaining useful life of two years and no expected selvege velue. Assume streight line depreciation. Required the Cranes account a. Determine the amount of additional depreciation expense Webb would recognize in Year 1 and Year 2 if the cost were capitalized inN e the amount of expense Webb would recognize in Year 1 and Year 2 if the cost were recognized as maintenance expense. c. Determine the effect of the overhaul on cash flow from operating ectivities for Year 1 and Year 2 if the cost were d. Determine the eect of the overha on cash fow from operating activities for Year 1 and Year 2 f the cost were recognized as expensed through depreciation charges. maintenance expense. Year 2 a. Depreciation expense Operating activities d. Operating activities Exercise 8-20A Computing and recording goodwill LO 8-10 Arizona Corp. acquired the business Data Systems for $325,000 cash and assumed all liabilities at the date of purchase. showed tangible assets of $3 market value of the tangible assets at $315,000 at the date of acquisition. Arizona Corp's financial condition just prior to the acquisition is shown in the following statements model: Data's books 50,000, liabilities of $20,000, and stockholders' equity of $330,000. An appraiser assessed the fair Assets Liab Equity Net Inc. Cash Flow Rev. Exp Cash 550,68e+ + Tang. Assets Goodwill NA NA NA +550,808 NA NA NA NA Required: a. Compute the amount of goodwill acquired. b. Record the acquisition in a financial statements model like the preceding one. d. Record the acquisition in general journal format. Complete this question by entering your answers in the tabs below. Required A Required B Required D Compute the amount of goodwill acquired Exercise 8-20A Computing and recording goodwill LO 8-10 Arizona Corp. acquired the business Data Systems for $325,000 cash and assumed all liabilities at the date of purchase. Data's books showed tangible assets of $350,000, liabilities of $20,000, and stockholders' equity of $330,000. An appraiser assessed the fair market value of the tangible assets at $315,000 at the date of acquisition. Arizona Corp's financial condition just prior to the acquisition is shown in the following statements model Liab. Equity : Net Inc. Assets Exp Cash Flow Cash 550,800 Tang. Assets Goodwill NA NA NA +550,80 NA NA NA NA Required: a. Compute the amount of goodwill acquired. b. Record the acquisition in a financial statements model like the preceding one. d. Record the acquisition in general journal format Complete this question by entering your answers in the tabs below. Required A Requirnd BRequired D Record the acquisition in a financial statements model like the preceding one. (In the Cash Flow column, use the initials OA to designate operating financing activity, NC for Net Change and NA to indicate the element is not affected by the event. Enter any decreases to account balances with a ARIZONA CORP. Statements Model Net Assets LiabilitiesEquityRevenue Expenses Income Cash Flow Tang. Goodwill Cash+ 550,000+ 550,000 NA Arizona Corp. acquired the business Data Systems for $325,000 cash and assumed all liabilities at the date of purchase. Data's books showed tangible assets of $350,000, liabilities of $20,000, and stockholders' equity of $330,000. An appraiser assessed the fair market value of the tangible assets at $315,000 at the date of acquisition. Arizona Corp.'s financial condition just prior to the acquisition is shown in the following statements model: Liab.Equity Net Inc. Cash Flow Assets Tang. Asset NA Rev Exp. Cas 55e,88 NA NA +558,8e NA NA NA NA Required a. Compute the amount of goodwill acquired b. Record the acquisition in a financial statements model like the preceding one. d. Record the acquisition in general journal format. Complete this question by entering your answers in the tabs below. Required A Required BRequired D Record the acquisition in general journal format. (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 Record cash paid for acquisition of assets and liabilities Note: Enter debits before credits Event General Journal DebitCredit Acquisition Exercise 8-18A Effect of revenue expenditures versus capital expenditures on financial statements 8 LO 8. On January 1, Year 1. Webb Construction Company overhauled four cranes, resulting in a slight increase in the life of the cranes. overhauls occur regularly at two-year intervals and have been treated as a maintenance expense in the pest. Management is considering whether to capitalize this years $29,460 cash cost in the Cranes asset account or to expense it as a maintenance expense. Assume that the cranes have a remaining useful life of two years and no expected selvege velue. Assume streight line depreciation. Required the Cranes account a. Determine the amount of additional depreciation expense Webb would recognize in Year 1 and Year 2 if the cost were capitalized inN e the amount of expense Webb would recognize in Year 1 and Year 2 if the cost were recognized as maintenance expense. c. Determine the effect of the overhaul on cash flow from operating ectivities for Year 1 and Year 2 if the cost were d. Determine the eect of the overha on cash fow from operating activities for Year 1 and Year 2 f the cost were recognized as expensed through depreciation charges. maintenance expense. Year 2 a. Depreciation expense Operating activities d. Operating activities Exercise 8-20A Computing and recording goodwill LO 8-10 Arizona Corp. acquired the business Data Systems for $325,000 cash and assumed all liabilities at the date of purchase. showed tangible assets of $3 market value of the tangible assets at $315,000 at the date of acquisition. Arizona Corp's financial condition just prior to the acquisition is shown in the following statements model: Data's books 50,000, liabilities of $20,000, and stockholders' equity of $330,000. An appraiser assessed the fair Assets Liab Equity Net Inc. Cash Flow Rev. Exp Cash 550,68e+ + Tang. Assets Goodwill NA NA NA +550,808 NA NA NA NA Required: a. Compute the amount of goodwill acquired. b. Record the acquisition in a financial statements model like the preceding one. d. Record the acquisition in general journal format. Complete this question by entering your answers in the tabs below. Required A Required B Required D Compute the amount of goodwill acquired Exercise 8-20A Computing and recording goodwill LO 8-10 Arizona Corp. acquired the business Data Systems for $325,000 cash and assumed all liabilities at the date of purchase. Data's books showed tangible assets of $350,000, liabilities of $20,000, and stockholders' equity of $330,000. An appraiser assessed the fair market value of the tangible assets at $315,000 at the date of acquisition. Arizona Corp's financial condition just prior to the acquisition is shown in the following statements model Liab. Equity : Net Inc. Assets Exp Cash Flow Cash 550,800 Tang. Assets Goodwill NA NA NA +550,80 NA NA NA NA Required: a. Compute the amount of goodwill acquired. b. Record the acquisition in a financial statements model like the preceding one. d. Record the acquisition in general journal format Complete this question by entering your answers in the tabs below. Required A Requirnd BRequired D Record the acquisition in a financial statements model like the preceding one. (In the Cash Flow column, use the initials OA to designate operating financing activity, NC for Net Change and NA to indicate the element is not affected by the event. Enter any decreases to account balances with a ARIZONA CORP. Statements Model Net Assets LiabilitiesEquityRevenue Expenses Income Cash Flow Tang. Goodwill Cash+ 550,000+ 550,000 NA Arizona Corp. acquired the business Data Systems for $325,000 cash and assumed all liabilities at the date of purchase. Data's books showed tangible assets of $350,000, liabilities of $20,000, and stockholders' equity of $330,000. An appraiser assessed the fair market value of the tangible assets at $315,000 at the date of acquisition. Arizona Corp.'s financial condition just prior to the acquisition is shown in the following statements model: Liab.Equity Net Inc. Cash Flow Assets Tang. Asset NA Rev Exp. Cas 55e,88 NA NA +558,8e NA NA NA NA Required a. Compute the amount of goodwill acquired b. Record the acquisition in a financial statements model like the preceding one. d. Record the acquisition in general journal format. Complete this question by entering your answers in the tabs below. Required A Required BRequired D Record the acquisition in general journal format. (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 Record cash paid for acquisition of assets and liabilities Note: Enter debits before credits Event General Journal DebitCredit Acquisition