Question
MOON CORP. is a manufacturer of exercise equipment such as treadmills, stair climbers, and elloptical machines. The Company has a Dec. 31 year end and
MOON CORP. is a manufacturer of exercise equipment such as treadmills, stair climbers, and elloptical machines. The Company has a Dec. 31 year end and uses ASPE. The accounting staff member who normally looks after the capital asset 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 50% of the normal amount of depreciation in the year of addition or disposal. Due to the staff members maternity leave, no depreciation or amortization expense has yet been taken in 2023.
1) The company completed construction of a new plant in Saskatchewan on December 15, 2023, to help it better meet the needs of its customers west of Ontario. The costs associated with this construction project were as follows:
Equipment (See below) : The equipment purchased for the new plant was bought on a deferred payment contract signed on December 1. SFI issued a $8-million, five-year, noninterest-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 2024.
NOTE: PLEASE PROVIDE DETAILS OF CALCULATION OF THE WRONG NUMBER FOR EQUIPMENT. AND EXPLANATION. THANKS!!!
Determine whether each 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 0 decimal places, e. . 5.275.) Determine whether each 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 0 decimal places, e. . 5.275.)Step by Step Solution
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