What is the total carrying value of the manufacturing plant (machine, and equipment) as of December 31, 2021?
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Grant Company has acquired a machine and equipment on January 2, 2018. The cost of the machine (including installation cost and decommissioning cost), P80,000,000 and the cost of the equipment is P20,000,000. The machine produces chemical products that are sold to overseas customers. As a condition to operate the machine, regular inspection for faults is performed every year at a cost of P1,000,000. The life of the machine is 10 years while the equipment 5 years. The company uses the straight-line method of
What is the total carrying value of the manufacturing plant (machine, and equipment) as of December 31, 2021?
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- Adams Company paid $92.000 to purchase a machine on January 1, Year 1. During Year 3, a technological breakthrough resuited in the development of a new machine that costs $118,000. The old machine costs $59,000 per year to operate, but the new machine could be operated for only $9,000 per year. The new machine, which will be available for delivery on January 1, year 3, has an expected useful life of four years. The old machine is more durable and is expected to have a remaining useful life of four years. The current market value of the old machine is $40,000. The expected salvage value of both machines is zero. Required Calculate the total avoidable costs in keeping the old machine and buying a new machine. Should the machine be replaced? Keep Old Buy New Total avoidable costs Should the machine be replaced?On April 1, 2018, the new machinery was ordered at a quoted price of P56, 000. On July 1, 2018, it arrived at Dodik Corp’s plant with an actual invoice price of P58,000, which it paid immediately. During July 2018, a new concrete platform was constructed at a cost of P4,000 to properly install the machine. In August 2018, testing was performed at a cost of P7,000 to ensure the machine was operating properly. On August 31, 2018, the machine was entered into service. Minor repairs and maintenance costs on the new machine amounted to P3,000 in September 2018. No other costs were incurred prior to December 31, 2018. Similar machinery is depreciated on a straight line basis over 10 years and typically has no residual value. What should be the depreciation expense for the year ended 31 December 2018?On 1/1/2020, the Horizon Industrial Company purchased a machine on the account whose price is 850,000 dinars, and it is subject to a sales tax of 10,000 dinars. The company paid in cash the fees for transporting and installing the machine 60,000 dinars, the costs of making a special base for the machine with electricity extensions 40,000 dinars, and the costs of conducting the start-up experiments 140,000 dinars. The company estimated the life span of the machine at five years, and its salvage value is 200,000 dinars. The machine is depreciated according to the straight-line method.On 1/1/2021, the company conducted a coverage test for this machine and found that the fair market value of the machine minus its selling costs is 580,000 dinars and that the net present value of the cash flows is expected to be obtained from using the machine is 660,000 dinars. And that the remaining life of the machine is 3 years, not 4 years.On December 31, 2022, the company conducted a coverage test for…
- Al FAZ company imported a plant from Germany for manufacturing different types of oil product on 01/01/2019. The plant has four detachable part namely Boiler, Heater, Compressor and Finisher. The company guarantee useful life of these components – for Boiler 5 years, Heater 2000 labor hours, Compressor 5000 units of production and Finisher 8000 units of production. The cost of the components are $ 10,000, $ 15,000, $ 25,000 and $ 8,000 respectively. Last year the company produced 2000 units with an estimated labor hours of 300. You are required to find out answer for the following questions. 1. What is the depreciation to be charged for Boiler in the year 2019? 2. What is the depreciation chargeable for Heater in the year 2019? 3. What is the depreciation chargeable for Compressor in the year 2019? 4. What is the depreciation chargeable for Finisher in the year 2019? 5. Assume that the company produces 3000 units, how much depreciation is chargeable for boiler?Al FAZ company imported a plant from Germany for manufacturing different types of oil product on 01/01/2019. The plant has four detachable part namely Boiler, Heater, Compressor and Finisher. The company guarantee useful life of these components – for Boiler 5 years, Heater 2000 labor hours, Compressor 5000 units of production and Finisher 8000 units of production. The cost of the components are $ 10,000, $ 15,000, $ 25,000 and $ 8,000 respectively. Last year the company produced 2000 units with an estimated labor hours of 300.1. Assume that the company produces 3000 units, how much depreciation is chargeable for boiler?On 1/1 2019, the Al-Qadhafi Industrial Company purchased an automated packaging line at a price of $60,000, and the company paid in cash the fees for transporting a packaging line $55,000, the work costs of a special base for the line $135,000, and the costs of conducting start-up experiments at $150,000. The company estimated the shelf life of the packaging line 6 years, the scrap value $400,000 and it is depreciated according to the straight line. On December 31, 2019, it was found that the fair market value of the packaging line, minus its selling costs, equals $11,750,000, and its remaining life is 4 years, not 5 years. Required 1- Acknowledgment of the operations related to the packaging line in the books of the Food Industries Company:• Costs incurred to get the packaging line ready for use• Inventory adjustments at the end of 2019• Impairment in the value of the packaging line at the end of 2019• Inventory adjustments at the end of 2020• 2- Preparing the partial financial…
- Forwind Ltd has recently acquired a machine that cost $29 000. The machine normally remains productive for six years. It is expected to continue in the production process at Forwind for eight years due to the excellent maintenance and operating policies in place at Forwind. The machine has the capacity to produce 20 000 units over a six-year life and 27 000 units over an eight-year life. Its salvage value after six years is expected to be $2 500 and after eight years $1 000. What depreciation would be charged in the first year of the machine's operation when 4 000 units were produced (rounded to the nearest dollar)? Select one alternative: $5 600 $4 296 $5 300 $4 148The initial cost of an evaporative crystallizer including its installation is P930,000. The approve life of the equipment is 13 years for depreciation. The estimated salvage value of the equipment is P66,000 and the cost of dismantling is P22,000. Using DBM method, what is the annual depreciation charge and what is the book value of the machine at the end of the eight year.The MGC Company has a contract with a hauler to transport its Naphtha requirements of 3,600,000 liters per year from a refinery in Batangas to its site in Paco at a cost of P1.05 per liter. It is proposed that the company buys a tanker with a capacity of 18,000 liters to service its requirements at a first cost of P8, 000,000 life is 6 years and has a salvage value of P800, 000. Other expenses are as follows: (a) Diesel fuel at P7.95 per liter and the tanker consumers 120 liter per round trip from Paco to Batangas and back (b) Lubricating oil and servicing is P3, 200 per month (c) Labor including overtime and fringe benefits for one driver and one helper is P21, 000 per month (d) Annual taxes and insurance, 5% of first cost (e) General maintenance per year is P40, 000 (f) Tires cost P32, 000 per set and will be renewed every 150 round trips. What should the MGC Company do if a 15% interest rate on investment is included in the analysis? Use ROR method.
- George Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to National Airlines for a period of 10 years. The normal selling price of the equipment is $299,140, and its unguaranteed residual value at the end of the lease term is estimated to be $20,000. National will pay annual payments of $40,000 at the beginning of each year. George incurred costs of $180,000 in manufacturing the equipment and $4,000 in sales commissions in closing the lease. George has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 8%. Instructions a. Discuss the nature of this lease in relation to the lessor and compute the amount of each of the following items. 1. Lease receivable. 2. Sales price. 3. Cost of goods sold. b. Prepare a 10-year lease amortization schedule for George, the lessor. c. Prepare all of the lessor's journal entries for the first year.A machine that produces cellphone components is purchased on January 1, 2024, for $171,000. It is expected to have a useful life of four years and a residual value of $12,000. The machine is expected to produce a total of 200,000 components during its life, distributed as follows: 40,000 in 2024, 50,000 in 2025, 60,000 in 2026, and 50,000 in 2027. The company has a December 31 year end. (a) Calculate the amount of depreciation to be charged each year, using each of the following methods: i. Straight-line method Straight-line method depreciation Senter a dollar amount per year per year ii. Units-of-production method (Round depreciation per unit to 3 decimal places, e.g. 15.257 and depreciation expense to 0 decimal places, e.g. 125.) Units-of-production method depreciation Senter a dollar amount per unit rounded to 3 decimal places per unit Year Depreciation Expense 2024 Senter a dollar amount 2025 Senter a dollar amount 2026 Senter a dollar amount 2027 Senter a dollar amount iii.…A machine that produces cellphone components is purchased on January 1, 2024, for $163,000. It is expected to have a useful life of four years and a residual value of $11,000. The machine is expected to produce a total of 200,000 components during its life, distributed as follows: 40,000 in 2024, 50,000 in 2025, 60,000 in 2026, and 50,000 in 2027. The company has a December 31 year end. (a) Calculate the amount of depreciation to be charged each year, using each of the following methods: i. Straight-line method Straight-line method depreciation $ I per year ii. Units-of-production method (Round depreciation per unit to 3 decimal places, e.g. 15.257 and depreciation expense to O decimal places, e.g. 125.)
