Property, plant, and equipment and intangible assets; comprehensive

The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2014. The accounting department of Thompson has started the fixed-asset and depreciation schedule presented below. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on the schedule are correct, you have obtained the following information from the company’s records and personnel:

a. Depreciation is computed from the first of the month of acquisition to the first of the month of disposition.

b. Land A and Building A were acquired from a predecessor corporation. Thompson paid $812,500 for the land and building together. At the time of acquisition, the land had a fair value of $72,000 and the building had a fair value of $828,000.

c. Land B was acquired on October 2, 2014, in exchange for 3,000 newly issued shares of Thompson’s common stock. At the date of acquisition, the stock had a par value of $5 per share and a fair value of $25 per share. During October 2014, Thompson paid $10,400 to demolish an existing building on this land so it could construct a new building.

d. Construction of Building B on the newly acquired land began on October 1, 2015. By September 30, 2016, Thompson had paid $210,000 of the estimated total construction costs of $300,000. Estimated completion and occupancy are July 2017.

e. Certain equipment was donated to the corporation by the city. An independent appraisal of the equipment when donated placed the fair value at $16,000 and the residual value at $2,000.

f. Machine A’s total cost of $110,000 includes installation charges of $550 and normal repairs and maintenance of $11,000. Residual value is estimated at $5,500. Machine A was sold on February 1, 2016.

g. On October 1, 2015, Machine B was acquired with a down payment of $4,000 and the remaining payments to be made in 10 annual installments of $4,000 each beginning October 1, 2016. The prevailing interest rate was 8%.

                                             THOMPSON CORPORATION   

                             Fixed Asset and Depreciation Schedule

For Fiscal Years Ended September 30, 2015 and September 30, 2016

Required:

Supply the correct amount for each numbered item on the schedule. Round each answer to the nearest dollar.(AICPA adapted)

Property, plant, and equipment and intangible assets; comprehensive

The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2014. The accounting department of Thompson has started the fixed-asset and depreciation schedule presented below. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on the schedule are correct, you have obtained the following information from the company’s records and personnel:

a. Depreciation is computed from the first of the month of acquisition to the first of the month of disposition.

b. Land A and Building A were acquired from a predecessor corporation. Thompson paid $812,500 for the land and building together. At the time of acquisition, the land had a fair value of $72,000 and the building had a fair value of $828,000.

c. Land B was acquired on October 2, 2014, in exchange for 3,000 newly issued shares of Thompson’s common stock. At the date of acquisition, the stock had a par value of $5 per share and a fair value of $25 per share. During October 2014, Thompson paid $10,400 to demolish an existing building on this land so it could construct a new building.

d. Construction of Building B on the newly acquired land began on October 1, 2015. By September 30, 2016, Thompson had paid $210,000 of the estimated total construction costs of $300,000. Estimated completion and occupancy are July 2017.

e. Certain equipment was donated to the corporation by the city. An independent appraisal of the equipment when donated placed the fair value at $16,000 and the residual value at $2,000.

f. Machine A’s total cost of $110,000 includes installation charges of $550 and normal repairs and maintenance of $11,000. Residual value is estimated at $5,500. Machine A was sold on February 1, 2016.

g. On October 1, 2015, Machine B was acquired with a down payment of $4,000 and the remaining payments to be made in 10 annual installments of $4,000 each beginning October 1, 2016. The prevailing interest rate was 8%.

THOMPSON CORPORATION

Fixed Asset and Depreciation Schedule

For Fiscal Years Ended September 30, 2015 and September 30, 2016

Required:

Supply the correct amount for each numbered item on the schedule. Round each answer to the nearest dollar.(AICPA adapted)

Adam Company uses the weighted-average method in its process costing system. The following information for the Assembly Department was obtained from the accounting records for September (all materials are added at the beginning of the process):

What are the equivalent units of production for material for the month?

A company has improved its production process. Under the old process, 19 workers could produce 4206 units per hours and the materials cost $53 per unit of output. Workers are paid $15 per hour and the finished product is sold for $126 per unit.

After the improvement, materials costs have been reduced by $12 per unit of output and it now takes 4 fewer workers to make the same amount of output.

What is the percentage change in multifactor productivity? (do not use a % sign, e.g. enter 50% as .5)

round to at least 5 decimal places

Your division is considering two inverstment projects, each of which required an upfront expenditure of $25million. You estimate that the cost of capital is 10 percent and that the investments will produce the following after-tax cash flows (in millions of dollars). I the firms WACC is 10 percent, and it uses a 2 percentage point (plus or minus) risk premium, and if project A is deemed riskier than usual project, what would its risk adjusted NPV be?

Year Project A project B

1 5 20

2 10 10

3 15 8

4 20 6

XYZ Inc. sell Product Y at P5 per unit. The variable costs of making and selling each unit is P3 while the total fixed cost is P2,000. The company wants to earn a profit of P3,000. The company is subject to 40% tax rate.

1. What is the break-even point in units and pesos?
2. What should be the level of sales in units and pesos to earn the desired profit if it is before tax?
3. What should be the level of sales in units and pesos to earn the desired profit if it is after tax?
4. What is the Margin of Safety for the target sales computed in requirement 3 in units, pesos, and percentage?

77-78. Rocky bought 7-year class property on January 4, this year, for $120,000. Assume his business income is $6,000 before the deduction for the Section 179 expense.

77.     The amount of the currently deductible 179 expense is: