Chapter 11 Operational Assets: Utilization and Impairment
Jackson Company purchased a new piece of equipment on July 1, 2018 at a cost of $36,000. The equipment has an estimated useful life of 10 years and an estimated residual value of $6,000. During its ten-year useful life, the equipment is expected to produce 500,000 units. The equipment actually produced the following number of units: 2018, 25,000; 2019, 84,000; and 2020, 90,000.
(a) Calculate depreciation expense for 2018, 2019, and 2020 assuming Jackson uses sum-of-the-years’-digits depreciation.
(b) Calculate depreciation expense for 2018, 2019, and 2020 assuming Jackson uses double-declining balance depreciation.
In: Accounting
You found an item totaling $48,000 treated as miscellaneous expenses. You seek clarification from the tax payer and was told that from 1 July 2020, he was appointed as a part-time consultant to a company and received a total of $48,000 for the period of 1 July 2020 to 31 December 2020. However, he did not declare it as income as he argued that it is not related to his business. Instead he treated it as miscellaneous expenses, a replacement cost for the time he spent on consulting and not attending to his own business (treated as expense for time spent/lost).
Explain the implication of the items and suggest the tax treatment you would adopt in addressing the issues.
In: Accounting
2018
2019
2020
Costs to
date
$1,500,000
$4,000,000
$6,200,000
Cost to
complete
$4,500,000
$2,200,000
$0
Amounts billed to date
$1,400,000
$5,800,000
$9,000,000
Amounts collected to date
$1,300,000
$4,300,000
$9,000,000
Determine the gross profit to be recognized for
2018 2019 2020
Record all journal entries necessary for 2018 below:
Assume that Stanford uses the completed contract method.
Determine the amount of revenue and expense to be recognized
in:
2018
2019
2020
In: Accounting
On December 31, 2020, an analysis of the accounts for a company reveals the following:
$100,000 loss on disposal of discontinued operations, before tax
$6,000 gain on sale of investments, before tax
$10,000 depreciation expense understatement in 2018 due to error, before tax
$20,000 cumulative understatement of net income of prior years from changing inventory valuation method in 2020, before tax
$168,000 income from operations, before tax
$4,000 dividends declared
The applicable income tax rate is 40% for all tax-related items. Retained earnings on December 31, 2019 were reported as $600,000.
What is ending retained earnings on December 31, 2020?
In: Accounting
For the publicly traded U.S. company Apple (AAPL), explain how macroeconomic principles, theories, policies, and tools affected strategy development within the organization. o In other words, what macroeconomic principles, theories, policies, and tools do you see at work within the company, driving the economic decisions and strategy development?
In: Economics
Q7) Pearl Home Improvement Company installs replacement siding,
windows, and louvered glass doors for single-family homes and
condominium complexes. The company is in the process of preparing
its annual financial statements for the fiscal year ended May 31,
2020. Jim Alcide, controller for Pearl, has gathered the following
data concerning inventory.
At May 31, 2020, the balance in Pearl’s Raw Materials Inventory
account was $444,720, and Allowance to Reduce Inventory to NRV had
a credit balance of $27,340. Alcide summarized the relevant
inventory cost and market data at May 31, 2020, in the schedule
below.
Alcide assigned Patricia Devereaux, an intern from a local college,
the task of calculating the amount that should appear on Pearl’s
May 31, 2020, financial statements for inventory under the LCNRV
rule as applied to each item in inventory. Devereaux expressed
concern over departing from the historical cost principle.
|
Cost |
Sales Price |
Net Realizable Value |
||||
| Aluminum siding | $76,300 | $69,760 | $61,040 | |||
| Cedar shake siding | 93,740 | 102,460 | 92,432 | |||
| Louvered glass doors | 122,080 | 203,176 | 183,447 | |||
| Thermal windows | 152,600 | 168,732 | 152,600 | |||
| Total | $444,720 | $544,128 | $489,519 |
Incorrect answer iconYour answer is incorrect.
Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2020.
| Balance in the Allowance to Reduce Inventory to NRV |
$ |
For the fiscal year ended May 31, 2020, determine the amount of the gain or loss that would be recorded (using the loss method) due to the change in Allowance to Reduce Inventory to NRV. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
| The amount of the gain (loss) |
$ |
In: Accounting
Pharoah Home Improvement Company installs replacement siding,
windows, and louvered glass doors for single-family homes and
condominium complexes. The company is in the process of preparing
its annual financial statements for the fiscal year ended May 31,
2020. Jim Alcide, controller for Pharoah, has gathered the
following data concerning inventory.
At May 31, 2020, the balance in Pharoah’s Raw Materials Inventory
account was $456,960, and Allowance to Reduce Inventory to Market
had a credit balance of $28,300. Alcide summarized the relevant
inventory cost and market data at May 31, 2020, in the schedule
below.
Alcide assigned Patricia Devereaux, an intern from a local college,
the task of calculating the amount that should appear on Pharoah’s
May 31, 2020, financial statements for inventory at
lower-of-cost-or-market as applied to each item in inventory.
Devereaux expressed concern over departing from the historical cost
principle. Assume Garcia uses LIFO inventory costing.
|
Cost |
Replacement |
Sales Price |
Net Realizable |
Normal Profit |
||||||||||
| Aluminum siding | $78,400 | $70,000 | $71,680 | $62,720 | $5,712 | |||||||||
| Cedar shake siding | 96,320 | 88,928 | 105,280 | 94,976 | 8,288 | |||||||||
| Louvered glass doors | 125,440 | 138,880 | 208,768 | 188,496 | 20,720 | |||||||||
| Thermal windows | 156,800 | 141,120 | 173,376 | 156,800 | 17,248 | |||||||||
| Total | $456,960 | $438,928 | $559,104 | $502,992 | $51,968 | |||||||||
(a1) Determine the proper balance in Allowance to
Reduce Inventory to Market at May 31, 2020.
| Balance in the Allowance to Reduce Inventory to Market |
$ |
(a2) For the fiscal year ended May 31, 2020,
determine the amount of the gain or loss that would be recorded due
to the change in Allowance to Reduce Inventory to Market.
| The amount of the gain (loss) |
$ |
In: Accounting
Taco Company installs replacement siding, windows, and louvered
glass doors for single-family homes and condominium complexes. The
company is in the process of preparing its annual financial
statements for the fiscal year ended May 31, 2020. Jim Alcide,
controller for Taco, has gathered the following data concerning
inventory.
At May 31, 2020, the balance in Headland’s Raw Materials Inventory
account was $461,040, and Allowance to Reduce Inventory to Market
had a credit balance of $29,040. Alcide summarized the relevant
inventory cost and market data at May 31, 2020, in the schedule
below.
Alcide assigned Burger, an intern from a local college, the task of
calculating the amount that should appear on Taco’s May 31, 2020,
financial statements for inventory at lower-of-cost-or-market as
applied to each item in inventory. Burger expressed concern over
departing from the historical cost principle. Assume Burger uses
LIFO inventory costing.
|
Cost |
Replacement |
Sales Price |
Net Realizable |
Normal Profit |
||||||||||
| Aluminum siding | $79,100 | $70,625 | $72,320 | $63,280 | $5,763 | |||||||||
| Cedar shake siding | 97,180 | 89,722 | 106,220 | 95,824 | 8,362 | |||||||||
| Louvered glass doors | 126,560 | 140,120 | 210,632 | 190,179 | 20,905 | |||||||||
| Thermal windows | 158,200 | 142,380 | 174,924 | 158,200 | 17,402 | |||||||||
| Total | $461,040 | $442,847 | $564,096 | $507,483 | $52,432 | |||||||||
(a1) Determine the proper balance in Allowance to
Reduce Inventory to Market at May 31, 2020.
| Balance in the Allowance to Reduce Inventory to Market |
$ |
(a2) For the fiscal year ended May 31, 2020,
determine the amount of the gain or loss that would be recorded due
to the change in Allowance to Reduce Inventory to Market.
| The amount of the gain (loss) |
In: Accounting
Pharoah Home Improvement Company installs replacement siding,
windows, and louvered glass doors for single-family homes and
condominium complexes. The company is in the process of preparing
its annual financial statements for the fiscal year ended May 31,
2020. Jim Alcide, controller for Pharoah, has gathered the
following data concerning inventory.
At May 31, 2020, the balance in Pharoah’s Raw Materials Inventory
account was $428,400, and Allowance to Reduce Inventory to Market
had a credit balance of $26,750. Alcide summarized the relevant
inventory cost and market data at May 31, 2020, in the schedule
below.
Alcide assigned Patricia Devereaux, an intern from a local college,
the task of calculating the amount that should appear on Pharoah’s
May 31, 2020, financial statements for inventory at
lower-of-cost-or-market as applied to each item in inventory.
Devereaux expressed concern over departing from the historical cost
principle. Assume Garcia uses LIFO inventory costing.
|
Cost |
Replacement |
Sales Price |
Net Realizable |
Normal Profit |
||||||||||
| Aluminum siding | $73,500 | $65,625 | $67,200 | $58,800 | $5,355 | |||||||||
| Cedar shake siding | 90,300 | 83,370 | 98,700 | 89,040 | 7,770 | |||||||||
| Louvered glass doors | 117,600 | 130,200 | 195,720 | 176,715 | 19,425 | |||||||||
| Thermal windows | 147,000 | 132,300 | 162,540 | 147,000 | 16,170 | |||||||||
| Total | $428,400 | $411,495 | $524,160 | $471,555 | $48,720 | |||||||||
(a1) Determine the proper balance in Allowance to
Reduce Inventory to Market at May 31, 2020.
| Balance in the Allowance to Reduce Inventory to Market |
$ |
(a2) For the fiscal year ended May 31, 2020,
determine the amount of the gain or loss that would be recorded due
to the change in Allowance to Reduce Inventory to Market.
| The amount of the gain (loss) |
$ |
In: Accounting
In: Accounting