Question

In: Accounting

Problem B At the beginning of 2018, Pineapple Inc. acquired a machine by issuing a $14,400...

Problem B

At the beginning of 2018, Pineapple Inc. acquired a machine by issuing a $14,400 3-year non interest-bearing note. The machinery had a book value of $4,350 in the seller's book. Although Pineapple felt that it could get a similar machine for less than $14,400, it was satisfied, since it would normally have to borrow at 10%. The principal of the note is to be repaid at $4,800 per year, beginning on 12/31/2018.

Required:

Prepare all the journal entries in books of Pineapple Inc. relating to this note in the year 2018. Specifically, what do you use as the interest rate in calculating present value of the machinery?

Solutions

Expert Solution

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

At the beginning of 2018, Advanced Industries acquired a large, custom-made machine with a fair value...
At the beginning of 2018, Advanced Industries acquired a large, custom-made machine with a fair value of $7,331,130 by signing a three-year lease agreement. The lease is payable in three annual payments of $3.0 million at the end of each year. Required: a. What is the effective annual interest rate implicit in the agreement? b. Prepare the lessee's journal entries required at the inception of the lease, the first lease payment which is due and paid December 31, 2018, and...
On December 31, 2017, Laser Inc. acquired a machine from Rocky Corporation by issuing a $600,000,...
On December 31, 2017, Laser Inc. acquired a machine from Rocky Corporation by issuing a $600,000, non–interest-bearing note that is payable in full on December 31, 2021. The company’s credit rating permits it to borrow funds from its several lines of credit at 10%. The machine is expected to have a five-year life and a $70,000 residual value. (a) Calculate the value of the note and prepare the journal entry for the purchase on December 31, 2017. [2 Marks] (b)...
Problem 4 At the beginning of 2012, Ross Technology, Inc. acquired the Valpo Corporation. In addition...
Problem 4 At the beginning of 2012, Ross Technology, Inc. acquired the Valpo Corporation. In addition to cash, receivables, and inventory, the following assets were recorded: Plant and equipment (depreciable assets) $120 million Developed technology (intangible asset) 60 million The plant and equipment is depreciated over an 8-year useful life on a straight-line basis. There is no estimated residual value. The purchased technology is estimated to have a 6-year useful life, no residual value, and is amortized using the straight-line...
5. A machine was acquired on January 1, 2018, at a cost of $80,000. The machine...
5. A machine was acquired on January 1, 2018, at a cost of $80,000. The machine was originally estimated to have a residual value of $5,000 and an estimated life of 5 years. The machine is expected to produce a total of 100,000 components during its life, as follows: 15,000 in 2018, 20,000 in 2019, 20,000 in 2020, 30,000 in 2021, and 15,000 in 2022. Instructions (a)   Calculate the amount of depreciation to be charged each year, using each of...
Company ABC acquired a machine at the beginning of the year. The machine had a 6-year...
Company ABC acquired a machine at the beginning of the year. The machine had a 6-year useful life. He expensed the entire acquisition cost in the current year. His error has what effect on current period net income (NI) and retained earnings at the end of the 4th year (RE4)? a. NI is understated; RE4 is understated b. NI is understated; RE4 is correct c. NI is overstated; RE4 is correct d. NI is overstated; RE4 is understated e. None...
Hanson Manufacturing Company purchased a machine for $1,060,000 at the beginning of 2018. The machine has...
Hanson Manufacturing Company purchased a machine for $1,060,000 at the beginning of 2018. The machine has an estimated useful life of five years and an estimated residual value of $270,000. The machine, which is expected to last 20,000 hours, was operated 3,000 hours in 2018 and 2,000 hours in 2019. REQUIRED: 1.      Compute the annual depreciation for 2018 and 2019 under the following depreciation methods. You must show all of your work to receive any credit.          (a) Straight-line:         ...
ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a...
ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a useful life of five years and was depreciated on a straight-line basis with no disposal value. ABC Ltd adopts the cost model for accounting for assets in this class. ABC Ltd makes the following estimates of the value of the machine: Date Net selling price Value in use Fair Value 30 June 2019 $550 000 520 000 590 000 30 June 2020 $460 000...
ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a...
ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a useful life of five years and was depreciated on a straight-line basis with no disposal value. ABC Ltd adopts the cost model for accounting for assets in this class. ABC Ltd makes the following estimates of the value of the machine: Date Net selling price Value in use Fair Value 30 June 2019 $550 000 520 000 590 000 30 June 2020 $460 000...
ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a...
ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a useful life of five years and was depreciated on a straight-line basis with no disposal value. ABC Ltd adopts the cost model for accounting for assets in this class. ABC Ltd makes the following estimates of the value of the machine: Date Net selling price Value in use Fair Value 30 June 2019 $550 000 520 000 590 000 30 June 2020 $460 000...
Vernon Manufacturing Company was started on January 1, 2018, when it acquired $83,000 cash by issuing...
Vernon Manufacturing Company was started on January 1, 2018, when it acquired $83,000 cash by issuing common stock. Vernon immediately purchased office furniture and manufacturing equipment costing $9,100 and $24,700, respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $3,400 salvage value and an expected useful life of three years. The company paid $11,500 for salaries of administrative personnel and $15,800 for wages to production personnel. Finally, the company paid...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT