Ron Parks Module 6 PPT. Presentation

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Study to Increase Profitability for the Main Street Home Improvement Company: A Completion Report By Ron Parks of Parks, Smith, & Jones Accounting

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1 Acquisition cost of long-lived assets: the following items represent expenditures (or receipts) related to construction of a new home office for Lowery company. Cost of land site, which include an old apartment building appraised at $75,000 $165,000 Legal fees, including fee for title search $2100 Payment of apartment building mortgage and related interest due at time of sale $9300 Payment for delinquent property taxes assumed by the purchaser $4000 Cost of razing the apartment building $17,000 Proceeds from sale of salvaged materials ($3800) Grading to establish proper drainage flow on land site $1900 Architects fee on new building $300,000 Proceeds from sales of excess dirt (from basement excavation) to owner of adjoining property (that was used to fill in a low area on property) ($2000) Payment to building contractor $5,000,000 Payment of medical bills of employee accidentally injured while inspecting building construction $1400 Special assessment for paving city sidewalks (paid to city) $18,000 Cost of paving driveway parking lot $25,000 Cost of installing lights in parking lot $9200 Premium for insurance on building during construction $7500 Cost of open house party to celebrate the opening of new building $8000 Required From the given data, calculate the proper balances for land, building, and land improvements accounts of Lowery Company. 2 Depreciation method: on January 2, Roth Inc. purchased a laser cutting machine to be used in the fabrication of a part for one of its key products. The machine cost $80,000, and its estimated useful life was four years or 1 million cuttings, after which it could be sold for $5000. Required Calculate the depreciation expense for each year of the machines useful life under each of the following depreciation methods: a. straight-line b. double declining balance c. Units of production. Assume annual production and cuttings of: a. 200,000 b. 350,000 c. 260,000 d. 190,000 3 Depreciation method: on January 2, 2012, Alvarez Company purchased an electroplating machine to help manufacture a part for one of its key products. The machine cost $218,700 and was estimated to have a useful life of six years or 700,000 pleadings, after which it could be sold for $23,400. Required a. calculate each year’s depreciation expense for the period 2012-2017 under each of the following depreciation methods: 1. straight-line 2. double declining balance 3. Units of production. (Assume annual production in pleadings of: i. 140,000 ii. 180,000 iii. 100,000 iv. 110,000 v. 80,000 vi. 90,000 b. Assume that the machine was purchased on September 1, 2012. Calculate each year’s depreciation expense for the period 2012 through 2018 under each of the following depreciation methods: 1. straight-line 2. double declining balance 4 Accounting for planting and intangible assets: selected transactions of Continental publishers Inc., ...

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