ch10 - Exercise Set C - Chapter 10 PROBLEMS SET C P10-1C...

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PROBLEMS: SET C P10-1C Taffler Company was organized on January 1. During the first year of operations, the following plant asset expenditures and receipts were recorded in random order. Debits 1. Accrued real estate taxes paid at time of purchase of real estate $ 2,000 2. Real estate taxes on land paid for the current year 3,000 3. Full payment to building contractor 600,000 4. Excavation costs for new building 22,000 5. Cost of real estate purchased as a plant site (land $100,000 and building $25,000) 125,000 6. Cost of parking lots and driveways 15,000 7. Architect’s fees on building plans 10,000 8. Installation cost of fences around property 4,000 9. Cost of demolishing building to make land suitable for construction of new building 24,000 $805,000 Credit 10. Proceeds from salvage of demolished building $ 2,500 Instructions Analyze the foregoing tranactions using the following column headings. Insert the number of each transaction in the Item space, and insert the amounts in the appropriate columns. For amounts entered in the Other Accounts column, also indicate the account title. Item Land Building Other Accounts P10-2C In recent years, Francisco Company purchased three machines. Because of heavy turnover in the accounting department, a different accountant was in charge of selecting the de- preciation method for each machine, and various methods were selected. Information concern- ing the machines is summarized on the next page. Salvage Useful Life Depreciation Machine Acquired Cost Value in Years Method 1 1/1/07 $86,000 $ 6,000 10 Straight-line 2 1/1/08 100,000 10,000 8 Declining-balance 3 11/1/10 78,000 6,000 6 Units-of-activity For the declining-balance method, the company uses the double-declining rate. For the units-of- activity method, total machine hours are expected to be 24,000. Actual hours of use in the first 3 years were: 2010, 1,000; 2011, 4,500; and 2012, 5,000. Instructions (a) Compute the amount of accumulated depreciation on each machine at December 31, 2010. (b) If machine 2 had been purchased on April 1 instead of January 1, what would be the depre- ciation expense for this machine in (1) 2008 and (2) 2009? P10-3C On January 1, 2010, Arlo Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $46,500. Related expenditures included: sales tax $2,200, shipping costs $175, insurance during shipping $75, installation and testing costs $50,and $90 of oil and lubricants to be used with the machinery dur- ing its first year of operation.Arlo estimates that the useful life of the machine is
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