XYZ Corporation is a research and development company focusing on energy industry process development. To facilitate research
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XYZ Corporation is a research and development company focusing on energy industry process development. To facilitate research efforts, XYZ management decided to purchase a new test rig. XYZ had the following expenditures on the rig during Y1:
- Paid $800,000 to the manufacturer of the rig, of which $200,000 were for design services and $600,000 were for the construction of the rig.
- Paid $8,000 to ship the rig.
- Paid $4,500 for insurance while in transit.
- Paid $25,000 for a specialized concrete pad put in place at IRHT's research facility to house the rig.
- Paid $16,000 for a specialized team to assemble and install the rig on site.
- Paid an engineering consulting firm $8,400 to test the rig before operations commenced.
- Paid $38,000 in labor costs to operate the rig after installation was complete and the asset was put in service on August 1, Y1.
- Spent $18,000 on supplies and electricity used to operate the rig from August - December.
- Spent $1,600 on a minor repair in November
The rig is expected to be used for 8 years and will be used most heavily in the early years of the asset's life, so XYZ will use the double declining balance method to calculate depreciation.
Complete the fixed asset schedule below summarizing proper accounting for these expenditures during Y1.
Amount capitalized during Y1 | |
Depreciation expense during Y1 | |
Other expenses incurred during Y1 |
Related Book For
Introduction To Health Care Management
ISBN: 9781284081015
3rd Edition
Authors: Sharon B. Buchbinder, Nancy H. Shanks
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