In January, Prahbu purchased a new machine for use in an existing production line of his...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
In January, Prahbu purchased a new machine for use in an existing production line of his manufacturing business for $85,000. Assume that the machine is a unit of property and is not a material or supply. Prahbu pays $2,950 to install the machine, and after the machine is installed, he pays $1,600 to perform a critical test on the machine to ensure that it will operate in accordance with quality standards. On November 1, the critical test is complete, and Prahbu places the machine in service on the production line. On December 3, Prahbu pays another $3,900 to perform periodic quality control testing after the machine is placed in service. How much will Prahbu be required to capitalize as the cost of the machine? Cost basis In January, Prahbu purchased a new machine for use in an existing production line of his manufacturing business for $85,000. Assume that the machine is a unit of property and is not a material or supply. Prahbu pays $2,950 to install the machine, and after the machine is installed, he pays $1,600 to perform a critical test on the machine to ensure that it will operate in accordance with quality standards. On November 1, the critical test is complete, and Prahbu places the machine in service on the production line. On December 3, Prahbu pays another $3,900 to perform periodic quality control testing after the machine is placed in service. How much will Prahbu be required to capitalize as the cost of the machine? Cost basis
Expert Answer:
Answer rating: 100% (QA)
All those costs are capitalised which are incurred ... View the full answer
Related Book For
Taxation Of Individuals 2017
ISBN: 9781259548666
8th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
Posted Date:
Students also viewed these accounting questions
-
In January, Prahbu purchases a new machine for use in an existing production line of his manufacturing business for $90,000. Assume that the machine is a unit of property and is not a material or...
-
On March 1, 2014, Wallace Company purchased a new machine with a suggested retail price of $123,000. The new machine was to replace an old machine that originally cost $90,000 and had $36,000 of...
-
On August 1, 2014, Iroko Corporation purchased a new machine for its assembly process. The cost of this machine was $136,400. The company estimated that the machine will have a trade-in value of...
-
What are conjugate faults, and what stress information do they give?
-
This problem continues the Davis Consulting situation from Problem. Daviss March Cash T-account from its general ledger is as follows: Daviss bank statement dated March 31, 2015, follows:...
-
PepsiCo can borrow in the debt market at 8%, and it currently has a debt to equity ratio (D/E) of 50%. If the cost of equity is 12%, what is the WACC? Assume that the corporate tax rate is 25%, and...
-
Suppose that the firm of Example 17.6 has a value of \(\$ 200,000\) instead of \(\$ 100,000\). Perhaps this makes the bond more secure. What, in fact, is the value of the bond in this case? Example...
-
On September 11, 2012, Home Store sells a mower for $500 with a one- year warranty that covers parts. Warranty expense is estimated at 8% of sales. On July 24, 2013, the mower is brought in for...
-
Shouldthe project be accepted using the IRR and NPV methods? WACC 9% Cost of machine2 million Working capital needed at time 0 is $250,000 none is recovered at projects end Cash flow year 1 $500,000...
-
Gary Brandt, treasurer of WorldCom, Inc., could not remember a year quite like the last. WorldCom had stunned the financial community in November 1997 with a $37-billion bid for MCI Corp., besting...
-
The critical values from the chi-square distribution table are important to compute the confidence interval of a population variance. Use Excel to replicate the chi-square critical values table from...
-
Draw a flow chart for the algorithm in Exercise P5.1. Data from Exercise P5.1 The following algorithm yields the season (Spring, Summer, Fall, or Winter) for a given month and day. Write a program...
-
Change the permutations method of Section 13.4 (which computed all permutations at once) to a PermutationIterator (which computes them one at a time). Now we need a way to iterate through the...
-
What does the following method do? Give an example of how you can call the method. public class BankAccount { public void mystery (BankAccount that, double amount) { this.balance this. balance...
-
Compiler optimizations may result in improvements to code size and/or performance. Consider one or more of the benchmark programs from the SPEC CPU2017 or the EEMBC benchmark suites. Use the RISC-V...
-
Enhance the output of Exercise E4.3 so that the numbers are properly aligned: Data from exercise E 4.3 Write a program that prompts the user for two integers and then prints The sum The difference...
-
Troy is a 9-year-old male who is doing well academically and socially. He began experiencing weakness in his legs; his movements were clumsy/sloppy and uncoordinated when he was playing and running....
-
From 1970 to 1990, Sri Lanka's population grew by approximately 2.2 million persons every five years. The population in 1970 was 12.2 million people.What is the best formula for P, Sri Lanka's...
-
Rasheed works for Company A, earning $350,000 in salary during 2016. Assuming he has no other sources of income, what amount of FICA tax will Rasheed pay for the year?
-
To help pay for the city's new stadium, the city of Birmingham recently enacted a 1 percent surcharge on hotel rooms. Is this a tax? Why or why not?
-
Aishwarya's husband passed away in 2015. She needs to determine whether Jasmine, her 17-year old stepdaughter who is single, qualifies as her dependent in 2016.Jasmine is a resident but not a citizen...
-
Explain what happens when a B cell first encounters a pathogen and binds to an antigen on the pathogen.
-
Why is a single innate immune cell able to respond to many different pathogens?
-
What is an antigen?
Study smarter with the SolutionInn App