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Recording Asset Retirement Obligation BPP Company maintains underground storage tanks for its operations. A new storage...
BPP Company maintains underground storage tanks for its operations. A new storage tank was installed and...
BPP Company maintains underground storage tanks for its operations. A new storage tank was installed and made ready for use at a cost of $400,000 on January 1, 2020. The useful life is estimated at 15 years, at which time the company is legally required to remove the tank and restore the area at an estimated cost of $40,000. The appropriate discount rate for the company is 12%. Answer the following questions, rounding your answers to the nearest whole number....
Will Rate: E13.14B (LO 3) (Asset Retirement Obligation) Oil Products Company purchases an oil tanker depot...
Will Rate:
E13.14B (LO 3) (Asset Retirement Obligation) Oil Products Company purchases an oil tanker depot on January 1, 2020, at a cost of $2,400,000. Oil Products expects to operate the depot for 10 years, at which time it is legally required to dismantle the depot and remove the underground storage tanks. It is estimated that it will cost $300,000 to dismantle the depot and remove the tanks at the end of the depot's useful life. Instructions (a) Prepare the...
Blue Company purchases an oil tanker depot on January 1, 2020, at a cost of $543,400....
Blue Company purchases an oil tanker depot on January 1, 2020,
at a cost of $543,400. Blue expects to operate the depot for 10
years, at which time it is legally required to dismantle the depot
and remove the underground storage tanks. It is estimated that it
will cost $81,690 to dismantle the depot and remove the tanks at
the end of the depot’s useful life.
Prepare the journal entries to record the depot and the asset
retirement obligation for...
Pina Company purchases an oil tanker depot on January 1, 2020, at a cost of $652,100....
Pina Company purchases an oil tanker depot on January 1, 2020, at a cost of $652,100. Pina expects to operate the depot for 10 years, at which time it is legally required to dismantle the depot and remove the underground storage tanks. It is estimated that it will cost $72,300 to dismantle the depot and remove the tanks at the end of the depot’s useful life. (a) Prepare the journal entries to record the depot and the asset retirement obligation...
Carla Company purchases an oil tanker depot on January 1, 2017, at a cost of $627,000. Carla expects to operate the depot for 10 years, at which time it is legally required to dismantle the depot and...
Carla Company purchases an oil tanker depot on January 1, 2017, at a cost of $627,000. Carla expects to operate the depot for 10 years, at which time it is legally required to dismantle the depot and remove the underground storage tanks. It is estimated that it will cost $73,530 to dismantle the depot and remove the tanks at the end of the depot’s useful life. Prepare the journal entries to record the depot (considered a plant asset) and the...
Recording and Reporting Warranties During 2020, Ward Company introduced a new product carrying a two-year warranty...
Recording and Reporting Warranties During 2020, Ward Company introduced a new product carrying a two-year warranty against defects, which is included in the selling price of the product. The estimated warranty costs are 2% of sales within the first 12 months following the sale and 4% in the second 12 months following the sale. Sales and actual warranty expenditures for the years ended December 31, 2020, and 2021 are: Actual Warranty Sales Expenditures 2020 $600.000 $9.000 2021 1.000.000 30,000 $1,600.000...
Recording Fixed Asset Disposal Manchester Company sells equipment on June 1, 2021, for $194,600 cash. Manchester...
Recording Fixed Asset Disposal Manchester Company sells equipment on June 1, 2021, for $194,600 cash. Manchester incurred $1,120 of removal and selling costs on disposal. The equipment cost $350,000 when it was purchased on January 2, 2018. Its estimated residual value and useful life were $56,000 and 10 years, respectively. Manchester uses straight-line depreciation and records annual depreciation on each December 31. a. Prepare the journal entries needed to record the asset disposal on June 1, 2021. b. Record the...
Recording Fixed Asset Disposal On April 1, 2020, one of the two large production machines used...
Recording Fixed Asset Disposal On April 1, 2020, one of the two large production machines used by Evert Company stripped a gear, causing major internal damage. On April 5, 2020, the company decided to purchase a new machine (cost of $146,000) so that production could continue. On January 1, the accounts showed the following for the old machine: original cost, $72,000; accumulated depreciation, $50,400 (20-year life; no residual value). The company did not accept a trade-in offer of $10,800. Instead,...
Recording Assurance-Type Warranty Liability Finisher Inc. sells merchandise for $450,000 in 2020 that includes a three-year...
Recording Assurance-Type Warranty Liability Finisher Inc. sells merchandise for $450,000 in 2020 that includes a three-year limited warranty, Warranty costs are estimated to be 19 of sales. The company incurred actual costs of $1,440 in 2020 related to the warranties. a. Record the warranty accrual at the time of sale in 2020. b. Record the adjustment to the warranty accrual for actual warranty costs in 2020. Account Name Cr. . 0 0 D 0 b. 0 0 E pepe cen...
Recording and Reporting Warranties During 2020, Ward Company introduced a new product carrying a three-year warranty...
Recording and Reporting Warranties During 2020, Ward Company introduced a new product carrying a three-year warranty against defects, which has a separate purchase price. The company collected $20,000, and $35,000 for this extended warranty feature in the years 2020 and 2021, respectively. The company uses straight-line recognition of warranty revenue. The estimated warranty costs are 2% of sales within the first 12 months following the sale and 44 in the second 12 months following the sale. For simplification, assume that...
Will Rate:
E13.14B (LO 3) (Asset Retirement Obligation) Oil Products Company purchases an oil tanker depot on January 1, 2020, at a cost of $2,400,000. Oil Products expects to operate the depot for 10 years, at which time it is legally required to dismantle the depot and remove the underground storage tanks. It is estimated that it will cost $300,000 to dismantle the depot and remove the tanks at the end of the depot's useful life. Instructions (a) Prepare the...
Blue Company purchases an oil tanker depot on January 1, 2020,
at a cost of $543,400. Blue expects to operate the depot for 10
years, at which time it is legally required to dismantle the depot
and remove the underground storage tanks. It is estimated that it
will cost $81,690 to dismantle the depot and remove the tanks at
the end of the depot’s useful life.
Prepare the journal entries to record the depot and the asset
retirement obligation for...
Recording and Reporting Warranties During 2020, Ward Company introduced a new product carrying a two-year warranty against defects, which is included in the selling price of the product. The estimated warranty costs are 2% of sales within the first 12 months following the sale and 4% in the second 12 months following the sale. Sales and actual warranty expenditures for the years ended December 31, 2020, and 2021 are: Actual Warranty Sales Expenditures 2020 $600.000 $9.000 2021 1.000.000 30,000 $1,600.000...
Recording Fixed Asset Disposal Manchester Company sells equipment on June 1, 2021, for $194,600 cash. Manchester incurred $1,120 of removal and selling costs on disposal. The equipment cost $350,000 when it was purchased on January 2, 2018. Its estimated residual value and useful life were $56,000 and 10 years, respectively. Manchester uses straight-line depreciation and records annual depreciation on each December 31. a. Prepare the journal entries needed to record the asset disposal on June 1, 2021. b. Record the...
Recording Fixed Asset Disposal On April 1, 2020, one of the two large production machines used by Evert Company stripped a gear, causing major internal damage. On April 5, 2020, the company decided to purchase a new machine (cost of $146,000) so that production could continue. On January 1, the accounts showed the following for the old machine: original cost, $72,000; accumulated depreciation, $50,400 (20-year life; no residual value). The company did not accept a trade-in offer of $10,800. Instead,...
Recording Assurance-Type Warranty Liability Finisher Inc. sells merchandise for $450,000 in 2020 that includes a three-year limited warranty, Warranty costs are estimated to be 19 of sales. The company incurred actual costs of $1,440 in 2020 related to the warranties. a. Record the warranty accrual at the time of sale in 2020. b. Record the adjustment to the warranty accrual for actual warranty costs in 2020. Account Name Cr. . 0 0 D 0 b. 0 0 E pepe cen...
Recording and Reporting Warranties During 2020, Ward Company introduced a new product carrying a three-year warranty against defects, which has a separate purchase price. The company collected $20,000, and $35,000 for this extended warranty feature in the years 2020 and 2021, respectively. The company uses straight-line recognition of warranty revenue. The estimated warranty costs are 2% of sales within the first 12 months following the sale and 44 in the second 12 months following the sale. For simplification, assume that...
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