[The following information applies to the questions displayed below.] At the beginning of the year, Tangerine Incorporated bought a shed, a machine, and a trailer. The shed initially cost $21,500 but had to be renovated at a cost of $780. The shed was expected to last 7 years, with a residual value of $2,050. Repairs costing $600 were incurred at the end of the first year of use. The machine cost $11,850, and is estimated to have a total life of 40,000 hours and residual value of $900. The machines was actually used 2,000 hours in year 1 and 4,000 hours in year 2. The trailer cost $12,500 and was expected to last 4 years, with a residual value of $2,000. Required: 1. Compute the amount to be capitalized for the shed. Total cost
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- During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated seven machines for $250,000 to improve efficiency in production of their remaining useful life of eight years Low-cost repairs throughout the year totaled $79,000 Replaced a broken gear on a machine for $6,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?Tree Lovers Inc. purchased 2,500 acres of woodland in which it intends to harvest the complete forest, leaving the land barren and worthless. Tree Lovers paid $5,000,000 for the land. Tree Lovers will sell the lumber as it is harvested and it expects to deplete it over ten years (150 acres in year one, 300 acres in year two, 250 acres in year three, 150 acres in year four, and 100 acres in year five). Calculate the depletion expense for the next five years and create the journal entry for year one.Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.
- The equipment has a delivered cost of $58,000. An additional $4,000 is required to install the new equipment. The new control device falls into the 7-year class for depreciation and will be depreciated using MACRS. At the end of 8 years, the estimated Salvage Value of the new equipment is $20,000.The existing control device has been in use for approximately 10 years, and it has been fully depreciated (that is, its book value is zero for the old device). However, its current market value for the old device is estimated to be $5,000. The applicable tax rate is 34%. The new control device requires lower maintenance costs and frees personnel who would otherwise monitor the system. In addition, it reduces product wastage. In total, it is estimated that during its eight-year life, the yearly savings will amount to $20,000 if the new control device is used. Yearly sales revenue is unchanged. The illustrative firm’s cost of capital is 15%. Since the new machine is more efficient, that it will…Budget Hardware Consultants purchased a building for $458,000and depreciated it on a straight-line basis over a 30-year period. The estimated residual value is $98,000. After using the building for 15 years, Budget realized that wear and tear on the building would wear it out before 30 years and that the estimated residual value should be $88,000. Starting with the 16th year, Budget began depreciating the building over a revised total life of 20 years using the new residual value. Journalize depreciation expense on the building for years 15 and 16. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Check your spelling carefully and do not abbreviate.) Begin by journalizing the depreciation on the building for year 15. Now, journalize the depreciation on the building for year 16.[The following information applies to the questions displayed below.) At the beginning of the year, Foster & Long Company bought machinery, shelving, and a forklift. The machinery initially cost $31,600 but had to be overhauled (at a cost of $2,400) before it could be installed (at a cost of $1,200) and finally put into use. The machinery's total life was estimated as 40,000 hours, with an estimated residual value of $1,000. The machinery was actually used 5,000 hours in year 1 and 7,000 hours in year 2. Repair costs were $500 in each year. The shelving cost $10,050 and was expected to last 5 years, with a residual value of $750. The forklift cost $17,550 and was expected to last six years, with a residual value of $2,300. 5. Compute double-declining-balance depreciation expense for years 1 and 2 for the forklift. TIP: Remember that the formula for double-declining-balance uses cost minus accumulated depreciation (not residual value). Year 1 Year 2 Double-declining-balance
- Wholesale Hardware Consultants purchased a building for $590,000 and depreciated it on a straight-line basis over a 35-year period. The estimated residual value is $100,000. After using the building for 15 years, Wholesale realized that wear and tear on the building would wear it out before 35 years and that the estimated residual value should be $84,000. Starting with the 16th year, Wholesale began depreciating the building over a revised total life of 25 years using the new residual value. Journalize depreciation expense on the building for years 15 and 16. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing the depreciation on the building for year 15. Date Accounts and Explanation Depreciation Expense-Building Accumulated Depreciation-Building To record depreciation on building. Now, journalize the depreciation on the building for year 16. Accounts and Explanation Date Depreciation Expense-Building…Company A purchased a corner lot five years ago at a cost of $134000. The lot was recently appraised at $119000. At the time of the purchase, the company spent $2100 to grade the lot and another $24000 to build a small building on the lot to house a parking lot attendant who has overseen the use of the lot for daily commuter parking. The company now wants to build a new retail store on the site. The building cost is estimated at $126000. What amount should be used as the initial cash flow for this building project?The Rumpel Felt Company purchased a felt press last year at a cost of $15,000. The division manager reports that for $13,000 (including installation), a new felt press can be bought. Both machines are in Class 43 with a 30% depreciation rate. The old machine's current market value is $12,000. The new press will be used for two years and then sold for $3,500. If the old press is not replaced, then it could be sold for $3,000 in two years. What is the present value of incremental tax shields in the terminal year? The tax rate is 40% and Rumpel's cost of capital is 10%. -$1,143 $236 $29 O $600
- Boston Hardware Consultants purchased a building for $560,000 and depreciated it on a straight-line basis over a 40-year period. The estimated residual value is $120,000. After using the building for 15 years, Boston realized that wear and tear on the building would wear it out before 40 years and that the estimated residual value should be $104,000. Starting with the 16th year, Boston began depreciating the building over a revised total life of 35 years using the new residual value. Journalize depreciation expense on the building for years 15 and 16.Required information [The following information applies to the questions displayed below.] At the beginning of the year, Mitt Corporation bought machinery, shelving, and a forklift. The machinery initially cost $30,800 but had to be overhauled (at a cost of $2,240) before it could be installed (at a cost of $1,120) and finally put into use. The machinery's total life was estimated as 40,000 hours, with an estimated residual value of $1,000. The machinery was actually used 5,000 hours in year 1 and 7,000 hours in year 2. Repair costs were $480 in each year. The shelving cost $9,950 and was expected to last 5 years, with a residual value of $730. The forklift cost $16,650 and was expected to last six years, with a residual value of $2,260. Required: 1. Compute the amount to be capitalized for the machinery. Total costRequired information [The following information applies to the questions displayed below.] At the beginning of the year, Mitt Corporation bought machinery, shelving, and a forklift. The machinery initially cost $30,800 but had to be overhauled (at a cost of $2,240) before it could be installed (at a cost of $1,120) and finally put into use. The machinery's total life was estimated as 40,000 hours, with an estimated residual value of $1,000. The machinery was actually used 5,000 hours in year 1 and 7,000 hours in year 2. Repair costs were $480 in each year. The shelving cost $9,950 and was expected to last 5 years, with a residual value of $730. The forklift cost $16,650 and was expected to last six years, with a residual value of $2,260. 5. Compute double-declining-balance depreciation expense for years 1 and 2 for the forklift. TIP: Remember that the formula for double-declining-balance uses cost minus accumulated depreciation (not residual value). Double-declining-balance Year 1 Year…