Chapter Columbia

Columbia Company, which fabricates machine instruments, had the accompanying exchanges identified with plant resources in 2014. Resource An: On June 2, 2014, Columbia bought a stepping machine at a retail cost of $12,000. Columbia paid 6% deals charge on this buy. Columbia paid a contractual worker $2,800 for an uncommonly wired stage for the machine, to guarantee noninterrupted capacity to the machine. Columbia appraises the machine will have a 4-year helpful life, with a rescue estimation of $2,000 toward the finish of 4 years. The machine was placed into utilization on July 1, 2014.Asset B: On January 1, 2014, Columbia, Inc. igned a fixed-value contract for development of a distribution center office at an expense of $1,000,000. It was assessed that the undertaking will be finished by December 31, 2014. On March 1, 2014, to back the development cost, Columbia acquired $1,000,000 payable April 1, 2015, or more enthusiasm at the pace of 10%. During 2014, Columbia gained store and gr ound installments totaling $750,000 under the agreement; the weighted-normal measure of gathered uses was $400,000 for the year.The overabundance acquired assets were put resources into momentary protections, from which Columbia acknowledged speculation income of $13,000. The distribution center was ompleted on December 1, 2014, at which time Columbia made the last installment to the contractual worker. Columbia evaluates the distribution center will have a 25-year helpful life, with a rescue estimation of $20,000. Columbia utilizes straight-line devaluation and utilizes the â€Å"half-year† show in representing halfway year deterioration. Columbia's monetary year finishes on December 31 . Guidelines (an) At what sum should Columbia record the procurement cost of the machine? b) What measure of promoted intrigue should Columbia remember for the expense of the distribution center? (c) On July 1, 2016, Columbia chooses to re-appropriate its stepping activity to Medek, Inc. As a major aspect of this arrangement, Columbia sells the machine (and the stage) to Medek, Inc. for $7,000. What is the effect of this removal on Columbia's 2016 pay before charges? Arrangement (a) Historical expense is estimated by the money or money proportional cost of acquiring the benefit and carrying it to the area and condition for its planned use.For Columbia, this is: Price $12,000 Tax 720 Platform 2,800 Total $15,520 Since Columbia has remarkable obligation brought about explicitly for the development venture, in a sum more prominent than the weighted-normal aggregated uses of $400,000, the loan fee of 10% is utilized for capitalization purposes. Capitalization endless supply of the venture at December 31, 2014. Consequently, the avoidable premium is $40,000, which is not exactly the real interest.The venture income ot is unimportant to the inquiry tended to in this issue in light of the fact that such premium earned on the unexpended bit of the credit isn't to be counterbala nced against the sum qualified for capitalization. (c) The salary impact is an increase or misfortune, dictated by contrasting the book estimation of the advantage for the removal esteem: Cost $1 5,520 Less: Accumulated deterioration 6,760* Book estimation of machine and stage 8,760 Less: Cash got for machine and stage 7,000 Loss before annual assessments $ 1,760 hyear $1,690 2014. entire year 3,380 2015. 2016. ? h year 1,690