Solutions_Exercises_Unit_7

Solutions_Exercises_Unit_7 - Financial Accounting I Grado...

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Financial Accounting I Grado Administracion de Empresa Exercises Unit 7
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Chapter 7. Fixed Tangible Assets. Special Issues Exercise 7.1. Distinguishing repairs and betterments Disney World experienced damage from a tornado at Space Mountain, one of its most popular attractions. It paid $30,200 to replace steel reinforcements to the structure damaged by the tornado, $86,100 for a new roof torn off by the tornado, $26,900 for a new conditioning system that was housed on the roof, and $12,600 to replace carpeting damaged by water. Disney World estimates that higher quality steel used as replacements added 20% more structural support in terms of weight-bearing capacity. The new air conditioning system provides 25% more cooling power than the unit previously installed in the attraction. Compute the amount of these expenses that Disney World should treat as a repair and the amount it should treat as a betterment.
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Exercise 7.2. Trading in used assets for new ones Rancho Landscape has an old truck that originally cost $10,000 but that now has a book value of $2,000. Rancho trades in this old truck for a new one with a fair market
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This note was uploaded on 02/03/2011 for the course ECON 101 taught by Professor Flora during the Spring '11 term at Universidad Carlos III de Madrid.

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Solutions_Exercises_Unit_7 - Financial Accounting I Grado...

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