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timurjin [86]
3 years ago
7

________ is the practice of taking a significant activity within the organization and contracting that activity out to an indepe

ndent party.
Business
1 answer:
wlad13 [49]3 years ago
6 0
Outsourcing is the practice of taking significant activity with in organization and contracting it to an independent party.
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On December 31, 2020, Pronghorn Inc. has a machine with a book value of $1,372,400. The original cost and related accumulated de
MaRussiya [10]

Question: I was unable to find the complete question on the google search, however I find a question that was similar to the question you pasted. So I will prefer to solve the following question:

On December 31, 2017, Travis Tritt Inc. has a machine with a book value of $940,000. The original cost and related accumulated depreciation at this date are as follows.

Machine                                         $1,300,000

Less: Accumulated depreciation <u>  360,000   </u>

Book value                            $940,000

Depreciation is computed at $60,000 per year on a straight-line basis.

Presented below is a set of independent situations. For each independent situation, indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal.

A) A fire completely destroys the machine on August 31, 2018. An insurance settlement of $430,000 was received for this casualty. Assume the settlement was received immediately.

b) On April 1, 2018, Tritt sold the machine for $1,040,000 to Dwight Yoakam Company.

(c) On July 31, 2018, the company donated this machine to the Mountain King City Council. The fair market value of the machine at the time of the donation was estimated to be $1,100,000.

Answer:  

Case A

In this case the machine was destroyed by fire. Fortunately, it was insured and as a result we received an amount of $430,000. This is the recoverable amount. Now we will treat this accident as a disposal and calculate the loss on the disposal of the asset.

Step 1 Remove all the accumulated depreciation associated with the Machine

Dr Accumulated Depreciation  $360,000

Step 2 Remove the value of the Asset by cost from the Machine account

Cr   Machine (cost)         $1300,000

Step 3 Calculate the Depreciation for the 8 months

$60,000 is calculated for one year and is given in the question.

For 8 months:

Depreciation for 8 months = $60,000 * 8/12 = $40,000

Dr Depreciation Expense  $40,000

Step 4 Record the insurance received as cash received due to asset destruction.

Dr Cash Received   $430,000

Step 5 Calculate the loss or profit on the destruction

(Profit) / Loss = $1300,000 Cost - $360,000 Accumulated Depreciation - Cash Received $430,000 - $40,000 Depreciation for 8 months = $470,000

We have a loss of $470,000 and we should record it by:

Dr Loss on Disposal  $470,000

Summary

Dr Loss on Disposal                $470,000

Dr Depreciation Expense         $40,000

Dr Cash Received                     $430,000

Dr Accumulated Depreciation  $360,000

Cr               Machine (cost)                            $1300,000

Case 2

In this case the asset is been sold for $1040,000 in the start of April,2018 which means it is sold after 3 months.

The first two steps are same.

Step 1 Remove all the accumulated depreciation associated with the Machine

Dr Accumulated Depreciation  $360,000

Step 2 Remove the value of the Asset by cost from the Machine account

Cr   Machine (cost)         $1300,000

Step 3 Calculate the Depreciation for the 3 months

For 3 months:

Depreciation for 3 months = $60,000 * 3/12 = $15,000

Dr Depreciation Expense  $15,000

Step 4 Record the cash received due to asset disposal.

Dr Cash Received   $1,040,000

Step 5 Calculate the loss or profit on the destruction

(Profit) / Loss = $1300,000 Cost - $360,000 Accumulated Depreciation - Cash Received $1,040,000 - $15,000 Depreciation for 3 months = ($115,000)

We have a Profit of $115,000 and we should record it by:

Cr Profit on Disposal  $115,000

Case C

In this case, the asset is donated at the start of July, 2018. This asset will be treated the same way but their is exception that it will be revalued to the fair value of the asset and thereafter will treated as disposal for making donations. This fair value will be treated as Donation Expense and will be debited.

Revaluation of the asset:

The asset will be revalued to $1,100,000 from its carrying value. Its carrying value is $940,000 and the excessive amount will be 160,000 which will be adjusted against accumulated depreciation.

Dr Accumulated depreciation $160,000

Cr Revaluation reserve                        $160,000

Now we will treat the asset as disposal and will remove the revaluation reserve according to IAS 16 Property, Plant and Equipment. The adjustment will go to Retained earnings:

Dr Revaluation reserve   $160,000

Cr Retained Earnings               $160,000

Now we will treat the asset as disposal made against Donation:

Step 1 Remove all the accumulated depreciation associated with the Machine by $200,000 (360,000-160,000).

Dr Accumulated Depreciation  $200,000

Step 2 Remove the value of the Asset by cost from the Machine account

Cr   Machine (cost)         $1300,000

Step 3 Calculate the Depreciation for the 6 months

For 6 months:

Depreciation for 6 months = $60,000 * 6/12 = $30,000

Dr Depreciation Expense  $30,000

Step 4 There is no cash receipt because of the asset donation.

Step 5 Calculate the loss or profit on the destruction

(Profit) / Loss = $1300,000 Cost - $200,000 Accumulated Depreciation - Cash Received $0 - $30,000 Depreciation for 6 months = $1,070,000

We have made a donation of $1,070,000 and we should record it as expense:

Dr Donation Expense  $1,070,000

3 0
3 years ago
Which of the following best explains why resources need to be allocated in the game of economic? A) Natural resources are often
Sladkaya [172]

Answer:

The best explanation for the need to allocate resources in the game of economics is that:

C) There are not enough resources to produce all of the goods and services that everyone wants.

Explanation:

In economics, it has been established that human needs are insatiable and that the resources to meet the needs are not readily and sufficiently available.  This is the bedrock of Economics.  It is the reason that Economics is studied as a separate course.  Scarcity and needs are important concepts in human interactions.  Therefore, the ability to allocate scarce resources to enable the production of goods and services is key to human development.

3 0
2 years ago
The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company’s fisc
adelina 88 [10]

Answer:

tru

Explanation:

4 0
3 years ago
Paul is responsible for recording sales transactions at his company. To minimize entry errors, Paul uses a(n) __________ process
marysya [2.9K]

Paul is responsible for recording sales transactions at his company. To minimize entry errors, Paul uses a (n) <u>accounting process</u>.

The accounting process is the set of steps that allows the economic operations of an entity or company to be expressed through financial statements.

This process is essential for any company since they will be able to see their expenses and income, and thus make projections and help it to minimize entry errors of the company.

  • During the accounting process, the economic operations of the company are compiled (purchases of materials, sales of products), together with the documents that guarantee each operation.

  • Finally, before the accounting process is closed, adjustments or modifications can be made that allow a reliable balance.

Therefore, we can conclude that Paul is responsible for recording sales transactions at his company. To minimize entry errors, Paul uses a (n) accounting process.  

Learn more here: brainly.com/question/20871705

5 0
2 years ago
Bims Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with
vekshin1

Answer:

59,700 units

Explanation:

The computation of the equivalent units for the conversion cost is shown below:

= Opening work in process units × completion percentage + units started and completed × completion percentage + ending work in process units  × completion percentage

= 4,600 units × 100% + 36,500 units × 100% + 31,000 units × 60%

= 4,600 units + 36,500 units + 18,600 units

= 59,700 units

6 0
3 years ago
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