1. Are the amounts at which fixed assets are reported in the balance sheet their approximate...

1. Are the amounts at which fixed assets are reported in the balance sheet their approximate market values as of the balance sheet date? Discuss.

2. Immediately after a used truck is acquired, a new motor is installed and the tires are replaced at a total cost of $5,750. Is this a capital expenditure or a revenue expenditure?

Expert Solution

Answer(1): No,

Assets represent ownership, assets are something with value. Fixed assets are the tangible assets that can be seen and touched such as Plant, machinery, equipment, land, building etc. Fixed assets are used for manufacturing and production purpose.

Fixed assets such as plant, machinery and equipment are reported on the cost or historical value less depreciation. Depreciation is the decrease in the value of assets as the time passes. As the time passes, fixed assets lose the value due to wear and tear that is the reason depreciation is charged and deducted from the cost of fixed assets. Depreciation is a non cash expense.

Land on the other hand is reported on the market value because it gets appreciated not depreciated.

Answer(2): This is a capital expenditure.

Capital expenditure- It is the amount that is spent on buying the physical/fixed assets or to upgrade the same.

Above is the capital expenditure because it is enhancing value and capacity of truck which will be utilized over a long period in its life.

ekkarill92 answered 2 years ago

If the assets of a subsidiary are reported at below fair value in the balance sheet...

If the assets of a subsidiary are reported at below fair value in the balance sheet at the date of acquisition, and a fair value adjustment is not undertaken as part of the consolidation process, will goodwill be overstated? Why or why not?

why deferred tax assets/liabilities are reported in the balance sheet??

1 Building a Balance Sheet KCCO, Inc. has current assets of $5,300, net fixed assets of $23,900,...

1 Building a Balance Sheet KCCO, Inc. has current assets of $5,300, net fixed assets of $23,900, current liabilities of $4,100, and long-term debt of $10,600. What is the value of shareholder’s equity for this firm? How much is net working capital?

1) What are some situations and examples in which estimates affect amounts reported in the balance...

1) What are some situations and examples in which estimates affect amounts reported in the balance sheet....Please discuss 2) According to GAAP, what is the balance sheet valuation of each of the following assets? a. Trade accounts receivable b. Land c. Inventories d. Trading securities Prepaid expenses 3) How can the skills, loyalty of workers ,customer base and reputation of the company be reliably measured or how will you approach measuring these items.... please explain 4)A balance sheet provides information...

1. Which of the following is a shortcoming of the balance sheet? A. Most assets being...

1. Which of the following is a shortcoming of the balance sheet? A. Most assets being recorded at their original purchase price instead of their market value B. Most assets being recorded at their market value instead of their original purchase price C. Inclusion of a company’s organically grown intangible assets (e.g., the brand value for Apple) on its balance sheet D. None of the above is a shortcoming of balance sheet 2. If you bought a piece of property...

Muffin’s Masonry, Inc.’s, balance sheet lists net fixed assets as $33.00 million. The fixed assets could...

Muffin’s Masonry, Inc.’s, balance sheet lists net fixed assets as $33.00 million. The fixed assets could currently be sold for $57.00 million. Muffin’s current balance sheet shows current liabilities of $15.00 million and net working capital of $14.00 million. If all the current accounts were liquidated today, the company would receive $8.20 million cash after paying the $15.00 million in current liabilities. What is the book value of Muffin’s Masonry’s assets today and the market value of these assets?...

GAAP requires receivables be reported on the balance sheet net of uncollectible amounts (bad debt). This...

GAAP requires receivables be reported on the balance sheet net of uncollectible amounts (bad debt). This means the allowance method must be used to record uncollectible accounts. The allowance method includes making an adjusting entry. In your own words, explain this procedure to a new accounting student. Address these topics: the two accounts used in the adjusting entry two methods of estimating the bad debt expense amount for the adjusting entry how each estimating method could result in a different...

An insurance company reported the following balance sheet at year end for 2009 (all amounts are...

An insurance company reported the following balance sheet at year end for 2009 (all amounts are in millions of dollars) Assets Investments $1500 Insurance assets 300 Total 1800 Liabilities and equity Insurance claims 700 Unearned premiums 140 Long-term debt 150 Equity 810 Total 1800 Investments are available-for-sale securities marked to market. The company reported the following income statement for 2010 Premium revenue 365 Investment income 60 Realized gains on investments 80 Total revenue 505 Insurance losses and expenses 405 Net...

Below are approximate amounts related to retained earnings reported by five companies in previous years. 1....

Below are approximate amounts related to retained earnings reported by five companies in previous years. 1. Coca-Cola reports an increase in retained earnings of $3.0 billion and net income of $6.5 billion. 2. Pepsico reports an increase in retained earnings of $3.2 billion and dividends of $2.4 billion. 3. Google reports an increase in retained earnings of $1.58 billion and net income of $1.58 billion. 4. Sirius Satellite Radio reports beginning retained earnings of −$1.64 billion, net loss of $0.98...

The balance sheet of MT Co. shows current assets of $14,000, net fixed assets of $21,800,...

The balance sheet of MT Co. shows current assets of $14,000, net fixed assets of $21,800, current liabilities of $4,300, long-term debt of $2,600, and equity of $28,900. The balance sheet of LF Inc. has current assets of $4,700, net fixed assets of $8,100, current liabilities of $2,200, long-term debt of $1,200, and equity of $9,400. The market value of LF's fixed assets is $14,100. MT purchases LF for $20,000 and raises the funds through an issue of long-term debt....

Question