mated life of the ye Depreciation Calen machine on July 2.2 Required: $2.500,000, and Long-Term Deht, S1,800,000 Calculme the 1. Straight- Double- b. How much fiscal year will have the Soldused machine for S162.00 in cash. The machine originally and had been depreciated for the first two years of its five-year useful the double declining-balance method. (Hint: You must compute the the accumulated depreciation account before you can record the sale h. Purchased a business for SHOCK incah The fair values of the new acquired were as follows: Land, $2.200,00); Buildings, $4.00) Problem 6.21 Capitalizing versus expensing effect on ROI and operating income the first month of its current fiscal year, Green Co. incurred repair costs on a machine that had eight years of remaining depreciable life. The reparo inappropriately capitalized. Green Co. reported operating income of $225 a. Assuming that Green Co. took a full year's straight-line depreciation expert the current year, calculate the operating income that should have been report b. Assume that Green Co.'s total assets at the end of the prior year and at the of the current year were $1,400,000 and $1.600.000, respectively. Calculate (based on operating income) for the current year using the originally reporte Problem 6.22 Capitalizing versus expensing-effect on ROI Early in January 2019, Telco LO 2,4 acquired a new machine and incurred S100,000 of interest, installation, and other costs that should have been capitalized but were expensed. The company carne operating income of $750,000 on average total assets of $5,000,000 for 2019. Aste Expensed $7.100 of cash expenditures incur production equipment LO 2,4 current year. Required: for the current year sconnect Problems C. Calculate December All applicable Problems are available in Connect Partial-year balance me 2019. Them value of SSD ing. Deprec Required: a. Using to be and th 2021 b. Usin tion ma data and then using corrected data. c. Explain the effect on ROI of subsequent years if the error is not corrected Identit Januar useful 50.00 in 20 the alte that the total cost of the new machine will be depreciated over 8 years using straight-line method. Required: a. Calculate the ROI for Tellco for 2019, b. Calculate the ROI for Tellco for 2019, assuming that the $100,000 had been capi. talized and depreciated over 8 years using the straight-line method. (Hint: There is an effect on net operating income and average assets.) c. Given your answers to a and b, why would the company want to account for this expenditure as an expense? d. Assuming that the $100,000 is capitalized, what will be the effect on ROI for 2020 and subsequent years, compared to expensing the interest, installation, and over- head costs in 2019? Explain your answer. 2 1 availler List Price of Samelem i New $ 131,000 67.000 42.000 Mare's No Book Valu on the Date of Sale $85.00 58200 25.400 Appraiser's Bim of Fair Value $100.000 45.000 27.000 Hem Punch press Lathe Welder Required: piece of equipment. Crow Co.'s depreciation calculation? Explain your answer. The remaining useful life to Hare Inc. The life of a new machine. The useful life of the asset to Crow Co. LO 2 Explain your answers. delivery vehicles. b. $12,000,000 cost to develop a coal mine, from which an estimated 1 million of coal can be extracted. c. $248,000 cost to replace the roof on a building. d. $140,000 cost of a radio and television advertising campaign to introduce a new product line. c. $8,000 cost of grading and leveling land so that a building can be constructed. Exercise 6.10 Capitalizing versus expensing For each of the following expenditures, indicate LO 2 the type of account (asset or expense) in which the expenditure should be recorded Explain your answers. a. $3,700 for repairing damage that resulted from the careless machine b. $25,300 Exercise e Basket purchase allocation Crow Cenched some of the machinery of metin, at a liquidation sale for a total et of S136,200 C a. Cuculate the amount that should be recorded by Crow Co as the cost of each h. Which of the following alternatives should be used as the depreciable life for Exercise 6.9 Capitalizing versus expensing For each of the following expenditures, indica the type of account (asset or expense) in which the expenditure should be recorded cost of moving and installing the machinery led $12.00. The following a $30,000 annual cost of routine repair and maintenance expenditures for a fleet