Expenditures for major additions, improvements, flight equipment modifications and certain equipment overhaul costs are capitalized when such costs are determined to extend the useful life of the asset. Maintenance and repairs are charged to expense as incurred. Assume that FedEx made extensive repairs on an existing building and added a new wing. The building is a garage and repair facility for delivery trucks that serve the Denver area. The existing building originally cost $720,000, and by the end of 2010 (10 years), it was half depreciated on the basis of a 20-year estimated useful life and no residual value. Assume straight-line depreciation was used. During 2011, the following expenditures related to the building were made:
a. Ordinary repairs and maintenance expenditures for the year, $7,000 cash.
b. Extensive and major repairs to the roof of the building, $122,000 cash. These repairs were completed on December 31, 2011.
c. The new wing was completed on December 31, 2011, at a cash cost of $230,000.
Required:
a. Applying the policies of Commonwealth Delivery, complete the following, indicating the effects for the preceding expenditures. Indicate the effects positive value for increase, negative value for decrease.
Building Accumulated Depreciation Depreciation Expense Repairs Expense Cash
Balance January 1, 2011 $720,000 $360,000
Depreciation for 2011
Balance prior to expenditures 720,000
Expenditure (a)
Expenditure (b)
Expenditure (c)
Balance December 31, 2011
b. What was the book value of the building on December 31, 2011?
c. Explain the effect of depreciation on cash flows.
Answers: 2
Other questions on the subject: Business
Business, 22.06.2019 12:30, sloane50
land, a building and equipment are acquired for a lump sum of $ 1,000,000. the market values of the land, building and equipment are $ 300,000, $ 800,000 and $ 300,000, respectively. what is the cost assigned to the equipment? (do not round any intermediary calculations, and round your final answer to the nearest dollar.)
Answers: 1
Business, 22.06.2019 17:30, neriah30
Fabian got into an accident on his way to work. he had multiple fractures in his leg. his doctor advised strict bed rest for at least three months. fabian is a freelance wildlife photographer who usually works on a contract basis, and this is his primary source of income. before the accident, fabian was planning his finances. which goal of his financial plan would fabian in getting through without pay for the next three months? the goal that requires the creation of a/an would fabian get through the next three months without pay.
Answers: 1
Business, 23.06.2019 00:50, alyssamiller401
Janis owns and operates a store in a country experiencing a high rate of inflation. in order to prevent the value of money in her cash register from falling too quickly, janis sends an employee to the bank four times per day to make deposits in a interest-bearing account that protects the store's revenues from the effects of inflation. this is an example of the (menu costs/ unit of account costs/ shoesleather costs) of inflation. pick one
Answers: 3
Business, 23.06.2019 09:50, ant5784tgi
The goal of an economist who formulates new theories is to a. provide an interesting framework of analysis, whether or not the framework turns out to be of much use in understanding how the world works. b. provoke stimulating debate in scientific journals. c. contribute to an understanding of how the world works. d. demonstrate that economists, like other scientists, can formulate testable theories.
Answers: 1
Do you know the correct answer?
Expenditures for major additions, improvements, flight equipment modifications and certain equipment...
Questions in other subjects:
Chemistry, 28.07.2019 06:30
Social Studies, 28.07.2019 06:30
