s Ivanhoe Corporation, which uses straight-line depreciation and amortization, incurred the following costs in 2026:Acquisition of R&D equipment with a useful life of 4 years in R&D projects (no salvage) $932000Cost of making minor modifications to an existing productAdvertising expense to introduce a new productEngineering costs incurred to advance a product to full production stageWhat amount should Ivanhoe report as research & development expense in 2026?O $1844000O $1053000O $1124000O $15400007.142000720000820000

Name: s Ivanhoe Corporation, which uses straight-line depreciation and amort
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Description: s Ivanhoe Corporation, which uses straight-line depreciation and amortization, incurred the following costs in 2026:Acquisition of R&D equipment with a useful life of 4 years in R&D projects (no salvage) $932000Cost of making minor modifications to a

R&D Expense Calculation involves determining costs associated with research and development…

Business

Accounting

Ivanhoe Corporation, which uses straight-line depreciation and amortization, incurred the following costs in 2026: Acquisition of R&D equipment with a useful life of 4 years in R&D projects (no salvage) $932000 Cost of making minor modifications to an existing product 142000 Advertising expense to introduce a new product Engineering costs incurred to advance a product to full production stage What amount should Ivanhoe report as research & development expense in 2026? 720000 820000

Ivanhoe Corporation, which uses straight-line depreciation and amortization, incurred the following costs in 2026: Acquisition of R&D equipment with a useful life of 4 years in R&D projects (no salvage) $932000 Cost of making minor modifications to an existing product 142000 Advertising expense to introduce a new product Engineering costs incurred to advance a product to full production stage What amount should Ivanhoe report as research & development expense in 2026? 720000 820000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 5E: Comprehensive: Acquisition, Subsequent Expenditures, and Depreciation On January 2, 2019, Lapar...

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On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.
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Blossom Limited purchased equipment on February 1, 2024, at a cost of $263,360As the CFO of the company, you are considering the merits of using the diminishing-balance or units-of-production method of depreciation instead of the straight-line methodwhich is currently being used for other equipment. The new equipment has an estimated residual value of $15,000 and an estimated useful life of either five years or 88,700 unitsDemand for the products produced by the equipment is sporadic so the equipment will be used more in some years than in others. Assume the equipment produces the following number of units each year: 14,200 units in 2024; 28,000 units in 2025; 20,000 units in 2026; 15,000 units in 2027; and 11,000 units in 2028; and 500 in 2029. Blossom has a Record the disposal of the huts on July 31, 2026, under each of the following independent assumptions: (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do…
The Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $2,092,000. This cost included the following expenditures: $ 1,900,000 Purchase price Freight charges Installation charges 36,000 26,000 Annual maintenance charge 130,000 Total $ 2,092,000 The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance method was used to determine depreciation expense for 2022 and 2023. In 2024, after the 2023 financial statements were issued, the company decided to switch to the straight-line depreciation method for this equipment. At that time, the company's controller discovered that the original cost of the equipment incorrectly included one year of annual maintenance charges for the equipment.
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