Growth Industries incurred the following costs in fiscal 2020:
Additional information:
•Growth Industries estimates that future site restoration of $1 million will be required in 20 years at an interest rate of 8%.
•While the equipment has a useful life of 10 years, the engine in the equipment will require replacement in 3 years. The engine has a fair value of $150,000.
•The landscaping, parking lot and fences will need to be replaced every 4 years.
•The useful life of the building and roof will be 20 years. The heating and air conditioning system will have a useful life of only 10 years.
Required:
a)Determine how much should be capitalized to property, plant and equipment.
b)Provide the journal entries required to record all of these transactions.
c)Provide all the adjusting journal entries required at year end for fiscal 2020.
d)Assume that the building is painted in fiscal 2021 at a cost of $45,000. Prepare the required journal entry.
e)Assume that the engine for the machine requires replacing after 2 years at a cost of 125,000. Prepare the required journal entries.
Round all values to the nearest dollar, if necessary.

Question

Growth Industries incurred the following costs in fiscal 2020:
  Additional information:
•Growth Industries estimates that future site restoration of $1 million will be required in 20 years at an interest rate of 8%.
•While the equipment has a useful life of 10 years, the engine in the equipment will require replacement in 3 years. The engine has a fair value of $150,000.
•The landscaping, parking lot and fences will need to be replaced every 4 years.
•The useful life of the building and roof will be 20 years. The heating and air conditioning system will have a useful life of only 10 years.
Required:
a)Determine how much should be capitalized to property, plant and equipment.
b)Provide the journal entries required to record all of these transactions.
c)Provide all the adjusting journal entries required at year end for fiscal 2020.
d)Assume that the building is painted in fiscal 2021 at a cost of $45,000. Prepare the required journal entry.
e)Assume that the engine for the machine requires replacing after 2 years at a cost of 125,000. Prepare the required journal entries.
Round all values to the nearest dollar, if necessary.

Quizplus · Accepted Answer

The Answer of Growth Industries incurred the following costs in fiscal 2020:
  Additional information:
•Growth Industries estimates that future site restoration of $1 million will be required in 20 years at an interest rate of 8%.
•While the equipment has a useful life of 10 years, the engine in the equipment will require replacement in 3 years. The engine has a fair value of $150,000.
•The landscaping, parking lot and fences will need to be replaced every 4 years.
•The useful life of the building and roof will be 20 years. The heating and air conditioning system will have a useful life of only 10 years.
Required:
a)Determine how much should be capitalized to property, plant and equipment.
b)Provide the journal entries required to record all of these transactions.
c)Provide all the adjusting journal entries required at year end for fiscal 2020.
d)Assume that the building is painted in fiscal 2021 at a cost of $45,000. Prepare the required journal entry.
e)Assume that the engine for the machine requires replacing after 2 years at a cost of 125,000. Prepare the required journal entries.
Round all values to the nearest dollar, if necessary.

Growth Industries Incurred the Following Costs in Fiscal 2020