Answer:
S/N ACCOUNT DEBIT CREDIT
1 Equipment $22,000
Cash $22,000
Being payment for new component expected to increase the
equipment’s productivity by 10% a year
2. Equipment Repairs expenses $6,250
Cash $6,250
Being payment for equipment repair
3. Equipment $14,870
Cash $14,870
Being payment for equipment repair to prolong the useful life
the asset
Explanation:
The initial cost incurred in acquiring an asset is debited to asset account, subsequently every other cost spent on the assets are either expenses against the earning of that period or expensed over many years over the useful life of the asset.
Capitalization is the recognition of an expense as an asset in the balance sheet rather than expenses in the income statement.
The payment of $22,000 paid for the equipment productivity must be capitalized, that is added to the cost of the asset because it is a cost that is expected to increase the equipment’s productivity by 10% a year.
The $6,250 paid for normal repair is a revenue items which is to be expensed against the earning of that period.
The $14,870 paid for repairs which will increase the useful life of the equipment from four to five years is a capital expenditure which should capitalized, that is added to the cost of the asset.
Answer:
B)do not vary based on how many customers the company serves
Explanation:
Fixed costs are defined as expenses that do not change as a function of the activity of a business, within the relevant period. For example, a retailer must pay rent and utility bills irrespective of sales. Some examples of fixed costs include rent, insurance premiums, or loan payments. A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold. Fixed costs are expenses that have to be paid by a company, independent of any specific business activities.
Answer:
Common stock
Explanation:
Common stock can likewise be referred to as a voting stock. Common stock for the most part conveys with it the privilege to decide on business element matters, for example, choosing the top managerial staff, building up corporate destinations and approach, and stock parts. Similarly, common stock can be broken into casting a ballot and non-casting a ballot classes.
Answer:
$136,500 long term capital gain
Explanation:
First of all, we must adjust SOA's cash since it has to pay taxes for the $90,000 gain. Its marginal tax rate was 30%, which means it must pay $27,000 in taxes (= $90,000 x 30%). So SOA's cash account will decrease to $173,000.
The total value of SOA's assets is $473,000 ($500,000 - taxes) which includes:
- cash: $173,000
- inventory: $80,000
- land and building: $220,000
When the assets are liquidated, the proceeds should be equally divided between Kevin and Bob, so each will get $236,500. Since Kevin's basis is $100,000, he should report a $136,500 long term capital gain (= $236,500 - $100,000).
Answer:
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