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kifflom [539]
3 years ago
10

Lightfoot Corp. incurred the following expenditures: $8,000 cost of annual property insurance on the company’s warehouse; $12,00

0 cost to develop and register a trademark; $30,000 cost to pave the parking lot for the company’s distribution center; $2,000 cost of repairs and maintenance on the company’s lawn service equipment. The total amount of these expenditures that Lightfoot Corp. should be capitalized are?
Business
1 answer:
jolli1 [7]3 years ago
7 0

Answer:

The total amount of expenditures that should be capitalized is;

$44,000

Explanation:

A cost or expenditure is said to be capitalized if it is recorded as fixed asset or asset, instead or an expense. It is recorded into the balance sheet instead of the income statement.

There are certain conditions an expenditure must fulfill before it is regarded as a fixed cost, and this includes;

1. The usefulness of the cost should be used in production for more than one year

2. The price of the  cost exceeds the minimum limit for capitalization.

Now let us consider the expenditures one after the other and see why the choices are made on them;

a. cost of annual property insurance: insurances on properties are not recorded as fixed costs because they are costs that can be done away with, and have no direct effect on the asset of the organization. An insurance of the warehouse does not add to the worth of the warehouse, it is only used to prevent the occurrence of a future disaster, hence it is not capitalized.

b. cost developing and registering a trademark is a fixed cost because the effect of the registration lasts for more than one year, and it can be seen as part of a cost of directly setting up a company, because without a trademark, the company operates illegally, hence it is part of the company's virtual asset.

c. costs of paving the parking lot and repair and maintenance of lawn service equipment are capitalized because they are directly used to improve or setup the fixed assets (parking lot and lawn equipment) of the company, and their value can last for more than one year.

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On January 1, the first day of its fiscal year, Pretender Company issued $12,700,000 of five-year, 11% bonds to finance its oper
yarga [219]

Answer:

1) Debit Bank $11787069 Debit bond discount $912931 ; Credit Bond $12700000

2) Debit Interest expense $751293 ; Credit Bank $660,000 Credit Discount on Bond payable $91293

3 )Debit interest expense $ 751293 ; Credit bank 660000, Credit discount on bond payable $91293

b)Interest expense = $1502586

c)It is because a financial crisis might have happened prior to issuing the bond and the company still went ahead with issuing even though the rate has changed.

Explanation:

interest expense = 12000000 * 0.11 * 6/12=$660000

discount on bond payable = $912931 /5 = 182586 /2= 91293

Interest expense = $751293 * 2 = $1502586

7 0
3 years ago
If shell decided to open a new service station I a rural area of uk, which was not well serviced with filling stations, it would
timofeeve [1]

Answer:

The stakeholders are ; Customers, shareholders/investors, local community, suppliers, employees, Government, competitors, creditors etc.

Explanation:

Stakeholders are a group of people or individuals within a locality, whose interest is Paramount to the survival of an organization.

There are two types of stakeholders, which are;

Internal stakeholders : These group of people or individuals are part of the organization . eg employees, board of directors, managers. Etc.

External stakeholders: These group of people or individuals are not part of the organization but have interest in its performance. Eg local community, media, consumers, suppliers etc.

There are also primary stakeholders and secondary stakeholders.

Primary stakeholders. I.e those who have financial interest in an organization. Eg creditors, shareholders/investors etc.

Secondary stakeholders. i.e those who do not have financial interest but whose decision is influential. Eg trade union, government body etc.

As in the scenario above, impact of shell on several stakeholders are enumerated below;

-Employees: There must be job security for employees, clean and safe working environment and there must be regular source of income with which salaries will be paid.

-Shareholders/Investors:They expect maximum returns on their investment in form of dividends. They also expected to be given preferential treatment in terms of lower prices and little or no value lost on their investment.

-Customer: They expect that products to be sold are reliable and safe for consumption and at fair prices.

-Suppliers: Price of product supplied should be agreed by parties involved. Suppliers also expect regular and frequent orders from them.

-local community: These people expect steady employment for their children, provision of social amenities like tarred roads, community hall, cinema hall etc and avoidance of noise and environmental pollution.

-Competitors: There should be healthy rivalry among producers of similar products and all element of demarketing should be avoided.

-Government ; Government expect from shell constant and regular payments of taxes, compliance with local laws and provision of corporate social responsibilities to the host community.

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4 0
3 years ago
Explain how lowell took advantage of division of labor.
AveGali [126]
Im not sure, sorry, I wish I could help
8 0
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In a process costing system, with the exception of the first department, each department receives output from the prior departme
Eduardwww [97]

Process Costing system involved several processes or departments under which the next department receives partially completed product from the previous department. The first department receives the raw material and it does not receive any output from other department.  

Hence except the first department, each department receives output from the prior department as a partially processed product.

Hence the answer is <u>True.</u>



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Anuta_ua [19.1K]

Answer:

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