Riley Holdings Corp. incurred the following expenditures: $3,700 cost to replace

Question

Riley Holdings Corp. incurred the following expenditures: $3,700 cost to replace the transmission in a company-owned vehicle; $17,000 cost of annual property insurance on the company's production facilities; $14,400 cost to develop and register a design patent; $62,800 cost to add a security and monitoring system to the company's distribution center; $1,000 cost to repair paint damage on a company-owned vehicle caused by normal wear and tear. Which of these expenditures should be capitalized? (Select all that apply) $3,700 $14,400 $62,800 $17000 $1,000 $3700

Explanation / Answer

a) $3,700 + $14,400 + $62,800

b) $21,000

c) Net asset value = 1.9 + 3.6 + 2.4 - 1.7 = 6.2

Amount paid = 7.6

Goodwill = 7.6 - 6.2 = $1.4 million

d) $250,362,759

e) $3,100 + $13,800 + $62,200

f) Net asset value = 1.2 + 2.9 + 1.7 - 1.0 = 4.8

Amount paid = 6.3

Goodwill = 6.3 - 4.8 = $1.5 million

g) $245,453,685

h) a) Dep exp = (325,000-75000)/10 = 25,000

Book value at end of 3 year = 325,000 -25000*3 = 250,000

b) Slm rate was = 10% so declining rate = 20%

Dep for 3 rd year = $128,000

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