Solutions to Accounting and Finance Problems Term Paper

Open, View, and/or
Download this Document

Total Length: 1039 words ( 3 double-spaced pages)

Total Sources: 0

Page 1 of 3

Accounting and Finance

Determine the costs that should be capitalized in the machinery account

Capitalization is the act of recognizing costs that provide a future economic benefit by setting up an asset account (Power Point). The costs that should be capitalized include:

Cost of raw materials used during trial runs of machinery $1,000

Additional materials, lumber, steel, and other supplies needed in installation $35,400

Wages paid to company employees to help unload and install the machinery during regular working hours $10,500

Trucking expenses related to the rigging company, which disassembled the machinery in Kentucky and transported it to Pawtucket $104,783

Legal bill related to writing the contract for the equipment $3,000

For any cost that was not capitalized, explain your reasoning

Cost to repair damage from machinery dropped from truck during unloading -- This cost is not included because it is self-inflicting by the company, or rather internally generated cost

ii. Cost of advertising the company's new manufacturing capability in national trade magazines. This cost will only be of benefit for a designated period and not for the economic life of the machinery iii. Casualty insurance policy on new machinery. This cost will only be of benefit for that period and not for the economic life of the machinery

iv. Interest paid on note to bank used to finance the purchase of machinery.

Stuck Writing Your "Solutions to Accounting and Finance Problems" Term Paper?

View All Our Example Solutions to Accounting and Finance Problems Term Paper

Have A Custom Example Essay Written

This cost will only be of benefit for that period and not for the economic life of the machinery

c. Determine the depreciable cost of the machinery

The depreciable cost of the machinery includes the cost of purchase and also set up and expenses linked to the machinery

200,000 + 3,000 + 104,783 + 10,500 + 6,000 + 35,400 + 5,540 + 3,000 + 1,000 + 30,000 = $399,223

d. Compute the depreciation expense for 2001 and 2002 using straight-line depreciation

Depreciation = Depreciable Cost / Number of Useful asset years

= (399,223 -- 30,000) / 20 years

i. Annual expense for 2001 is $18,461.15 x 3/12 = $4,615.29

ii. Annual expense for 2002 is $18,461.15

e. Compute the depreciation expense for 2001 and 2002 using double-declining balance depreciation

The depreciation under double declining method is calculated as:

Depreciable Cost / Asset's useful life in years x 2

Depreciable Cost = (original cost - accumulated depreciation)

i. Depreciation expense for 2001

Accumulated depreciation for 2001 = 0

= ((399,223 -0) / 20) x 2

= $39,922.3

ii. Depreciation expense for 2002

((399,223 -39,922.3) / 20) x 2

= $35,930.07

f. Assume that, during 2004, a large oven used to dry decorated prices needed a major repair costing.....

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Solutions To Accounting And Finance Problems" (2015, August 29) Retrieved June 11, 2025, from
https://www.aceyourpaper.com/essays/solutions-accounting-finance-problems-2152487
   

Open, View, and/or
Download this Document
order custom essay example