Jason's Reclaimers entered into a contract with Gary's Demolition to manage the processing of recycled materials on Gary's various demolition projects. Services for the 3-year contract include collecting, sorting, and transporting reclaimed materials to recycling centers or contractors who will reuse them. Jason's incurs selling commission costs of $2,180 to obtain the contract. Before performing the services, Jason's also designs and builds receptacles and loading equipment that interfaces with Gary's demolition equipment at a cost of $25,100. These receptacles and equipment are retained by Jason's and can be used for other projects. Gary's promises to pay a fixed fee of $12,850 per year, payable every 6 months for the services under the contract. Jason's incurs the following costs: design services for the receptacles to interface with Gary's equipment $3,220, loading equipment controllers $6,400, and special testing and OSHA inspection fees $2,180 (some of Gary's projects are on government property). (a) Determine the costs that should be capitalized as part of Jason's Reclaimers revenue arrangement with Gary's Demolition. (If answer is 0, please enter 0. Do not leave any fields blank.) Commission costs Design services Cost of loading equipment controllers Inspection fees Receptacles and loading equipment $ $ EA EA
Jason's Reclaimers entered into a contract with Gary's Demolition to manage the processing of recycled materials on Gary's various demolition projects. Services for the 3-year contract include collecting, sorting, and transporting reclaimed materials to recycling centers or contractors who will reuse them. Jason's incurs selling commission costs of $2,180 to obtain the contract. Before performing the services, Jason's also designs and builds receptacles and loading equipment that interfaces with Gary's demolition equipment at a cost of $25,100. These receptacles and equipment are retained by Jason's and can be used for other projects. Gary's promises to pay a fixed fee of $12,850 per year, payable every 6 months for the services under the contract. Jason's incurs the following costs: design services for the receptacles to interface with Gary's equipment $3,220, loading equipment controllers $6,400, and special testing and OSHA inspection fees $2,180 (some of Gary's projects are on government property). (a) Determine the costs that should be capitalized as part of Jason's Reclaimers revenue arrangement with Gary's Demolition. (If answer is 0, please enter 0. Do not leave any fields blank.) Commission costs Design services Cost of loading equipment controllers Inspection fees Receptacles and loading equipment $ $ EA EA
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 43P
Related questions
Question
Transcribed Image Text:Jason's Reclaimers entered into a contract with Gary's Demolition to manage the processing of recycled materials on Gary's various
demolition projects. Services for the 3-year contract include collecting, sorting, and transporting reclaimed materials to recycling
centers or contractors who will reuse them. Jason's incurs selling commission costs of $2,180 to obtain the contract. Before
performing the services, Jason's also designs and builds receptacles and loading equipment that interfaces with Gary's demolition
equipment at a cost of $25,100. These receptacles and equipment are retained by Jason's and can be used for other projects. Gary's
promises to pay a fixed fee of $12,850 per year, payable every 6 months for the services under the contract. Jason's incurs the
following costs: design services for the receptacles to interface with Gary's equipment $3,220, loading equipment controllers $6,400,
and special testing and OSHA inspection fees $2,180 (some of Gary's projects are on government property).
(a)
Determine the costs that should be capitalized as part of Jason's Reclaimers revenue arrangement with Gary's Demolition. (If
answer is 0, please enter 0. Do not leave any fields blank.)
Commission costs
Design services
Cost of loading equipment controllers
Inspection fees
Receptacles and loading equipment
$
$
EA
EA
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