Question
Problem#1 PharoahCo. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were recorded in
Problem#1
PharoahCo. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were recorded in random order during the calendar year 2020.
Purchase | ||
Cash paid for equipment, including sales tax of $6,300 | $132,300 | |
Freight and insurance cost while in transit | 2,520 | |
Cost of moving equipment into place at factory | 3,906 | |
Wage cost for technicians to test equipment | 5,040 | |
Insurance premium paid during first year of operation on this equipment | 1,890 | |
Special plumbing fixtures required for new equipment | 10,080 | |
Repair cost incurred in first year of operations related to this equipment | 1,638 | |
Construction | ||
Material and purchased parts (gross cost $252,000; failed to take2% cash discount) | $252,000 | |
Imputed interest on funds used during construction (stock financing) | 17,640 | |
Labor costs | 239,400 | |
Allocated overhead costs (fixed-$25,200; variable-$37,800) | 63,000 | |
Profit on self-construction | 37,800 | |
Cost of installing equipment | 5,544 |
Compute the total cost to be capitalized for each of these two pieces of equipment.
Purchase equipment | $enter a dollar amount | |
Construction equipment | $ |
Problem #2
The following expenditures and receipts are related to land, land improvements, and buildings acquired for use in a business enterprise. The receipts are enclosed in parentheses.
(a) | Money borrowed to pay building contractor (signed a note) | $(292,700 | ) | ||
(b) | Payment for construction from note proceeds | 292,700 | |||
(c) | Cost of land fill and clearing | 10,240 | |||
(d) | Delinquent real estate taxes on property assumed by purchaser | 7,220 | |||
(e) | Premium on 6-month insurance policy during construction | 9,900 | |||
(f) | Refund of 1-month insurance premium because construction completed early | (1,650 | ) | ||
(g) | Architect's fee on building | 25,360 | |||
(h) | Cost of real estate purchased as a plant site (land $206,100and building $55,700) | 261,800 | |||
(i) | Commission fee paid to real estate agency | 8,720 | |||
(j) | Installation of fences around property | 4,310 | |||
(k) | Cost of razing and removing building | 12,100 | |||
(l) | Proceeds from salvage of demolished building | (5,100 | ) | ||
(m) | Interest paid during construction on money borrowed for construction | 11,850 | |||
(n) | Cost of parking lots and driveways | 18,640 | |||
(o) | Cost of trees and shrubbery planted (permanent in nature) | 15,130 | |||
(p) | Excavation costs for new building | 2,940 |
Identify each item by letter and list the items in columnar form, using the headings shown below. All receipt amounts should be reported in parentheses. For any amounts entered in the Other Accounts column, also indicate the account title.
Item | Land | Land Improvements | Building | Other Accounts | ||||||
(a) | $enter a dollar amount | $enter a dollar amount | $enter a dollar amount | $enter a dollar amount | enter an account title | |||||
(b) | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter an account title | |||||
(c) | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter an account title | |||||
(d) | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter an account title | |||||
(e) | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter an account title | |||||
(f) | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter an account title | |||||
(g) | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter an account title | |||||
(h) | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter an account title | |||||
(i) | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter an account title | |||||
(j) | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter an account title | |||||
(k) | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter an account title | |||||
(l) | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter an account title | |||||
(m) | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter an account title | |||||
(n) | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter an account title | |||||
(o) | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter an account title | |||||
(p) | enter a dollar amount | enter a dollar amount |
Problem 3
Coronado Industriespurchased equipment for $31600. Sales tax on the purchase was $1450. Other costs incurred were freight charges of $360, repairs of $600for damage during installation, and installation costs of $410. What is the cost of the equipment?
Problem 4
SheffieldFootball Co. had a player contract with Watts that is recorded in its books at $8430000on July 1, 2020.IvanhoeFootball Co. had a player contract with Kurtz that is recorded in its books at $11150000on July 1, 2020. On this date,Sheffieldtraded Watts toIvanhoefor Kurtz and paid a cash difference of $1115000. The fair value of the Kurtz contract was $12600000on the exchange date. The exchange had no commercial substance. After the exchange, the Kurtz contract should be recorded inSheffield's books at
Problem#5
Blossom Companytraded machinery with a book value of $600000and a fair value of $950000. It received in exchange fromCrane Companya machine with a fair value of $855000and cash of $95000.Crane's machine has a book value of $902500. What amount of gain shouldBlossomrecognize on the exchange (assuming lack of commercial substance)?
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