Fit Fixtures Incorporated (FFI) is a manufacturer of exercise equipment such as treadmills, stair climbers, and elliptical machines. The company has a December 31 year end and uses ASPE. The accounting staff member who normally looks after the capitalet accounts was on maternity leave for the year, and the company put all transactions in a temporary account called Asset Additions and Disposals. The company policy on calculating depreciation for partial periods of ownership is to take 0% of the normal amount of depreciation in the year of addition or disposal. Due to the staff member's maternity leave, no depreciation or amortization expense has yet been taken in 2020 1. The company completed construction of a new plant in Saskatchewan on December 15, 2020, to help it better meet the needs of its customers west of Ontario. The costs associated with this construction project were as follows: Land $530,000 Construction contract: building, 20 years of useful life, residual value of $53,000 1.590,000 Equipment (See below! Furniture 265.000 47.700 Training costs (employees learning to use equipment) 79,500 Avoidable interest calculated at 8% on financing of construction project from inception until put in use The equipment purchased for the new plant was bought on a deferred payment contract signed on December 1.Frissued interest bearing note payable to the equipment supplier at a time when the annual market rate of de on December 1 of each year, beginning in 2021 2 Furniture 265.000 Training costs (employees learning to use equipment) 47.700 Avoidable interest calculated at 8% on financing of construction project from inception until putin use 79.500 The equipment purchased for the new plant was bought on a deferred payment contract signed on December 1. Frissued $5 million, five year, non-interest-bearing note payable to the equipment supplier at a time when the annual market rate of interest was 5%. The note will be repaid with five equal payments made on December 1 of each year, beginning in 2021. FFI purchased a used computer and a printer at an auction for $2,650. The printer needed a new drum. The cost of the new drum was $530. The used computer's fair market value was $2.120 it purchased separately. The printer was worth $1,060 without a drum and $1,590 with the drum replaced. On July 1, 2020, FFI sold a delivery truck for $10.600. The truck originally cost $26.500, and accumulated depreciation on the truck to December 31, 2019, was $10,600. The truck was amortized on a straight-line basis over a five-year period, with no residual value. The sale was recorded as a debit to Cash and a credit to Asset Additions and Disposals. No amortiration was recorded in the current year. Due to an office redesign in the Ontario building. FFI traded some old equipment for different equipment with a similar life and value in use. The fair value of the equipment disposed of was $5,300. The cost of this equipment was $7.420, and the accumulated depreciation on the equipment at December 31, 2019, was $3,180. This transaction was not recorded in the books of account. No entry was made to record the exchange. Shortly after the new factory was completed, vandals attacked the building and caused significant damage. The costs to correct the damage, which were not covered by insurance, included: 3. 4. 5. $4.240 New paint to cover graffiti 104 5. Shortly after the new factory was completed, vandals attacked the building and caused significant damage. The costs to correct the damage, which were not covered by insurance, included: $4,240 New paint to cover graffiti Glass for broken windows Improved security system 10,600 26,500 6. During the year, the company developed a new piece of exercise equipment that has a built-in video game. It was the policy to amortize development costs on a straight-line basis over three years, with 50% of the normal amount in the year of development. The costs associated with product development included: $53,000 Costs to determine how a video game would work with exercise equipment 371.000 42,400 Design, testing, and construction of prototype equipment Costs to determine the best production process for the new equipment Advertising costs to alert customers about the new product 49,820 7. The company has goodwill and an intangible asset as follows: Improved security system 26.500 6. During the year, the company developed a new piece of exercise equipment that has a built-in video game. It was the policy to amortize development costs on a straight-line basis over three years, with 50% of the normal amount in the year of development. The costs associated with product development included: 371.000 42.400 Costs to determine how a video game would work with exercise equipment $53,000 Design, testing, and construction of prototype equipment Costs to determine the best production process for the new equipment Advertising costs to alert customers about the new product 49.820 The company has goodwill and an intangible asset as follows: 7. Original Costas at December 31 2019 Accumulated Amortization as at December 31, 2019 Amortization Method Details Asset Goodwill $0 Not applicable $530,000 Recorded in 2015 when the company took over the business of its predecessor Purchased in 2015 when the company took over the business of its Customer list Straight-line over 10 years $119.250 $265.000 Advertising costs to alert customers about the new product 49820 7. The company has goodwill and an intangible asset as follows: Original Costas at December 31, 2019 Accumulated Amortization as at December 31. 2019 Amortization Method Asset Details Goodwill $O Not applicable $530,000 Recorded in 2015 when the company took over the business of its predecessor Purchased in 2015 when the company took over the business of its predecessor Customer list Straight-line over 10 years $119,250 $265.000 The customer list has lost value and will not provide benefits through to 2025, as was originally predicted. It is now expected to provide undiscounted future cash flows of $53,000 in total over the next two years. There are no estimated costs to sell the list asi will not be sold, and the value in use is $48.760 Goodwill has a recoverable value of $742.000 as at December 31, 2020 a) New Saskatchewan plant Determine whether cach expenditure related to the new Saskatchewan plant must be capitalized or expensed or whether it could be either depends on policy choice) (Round answers to decimal places, s. 5.275) Capitalize Expense Policy Choke to Capitalize of Expense Land $ 5 Building Equipment Furniture Training costs Avoidable interest e Textbook and Media