1. Oregon Wood Supply purchased a drilling machine for S50,000. In addition to t
ID: 2587289 • Letter: 1
Question
1. Oregon Wood Supply purchased a drilling machine for S50,000. In addition to the purchase price, Oregon Wood Supply made the following expenditures: freight, $3,000, installation S4,500; testing. $3,500; personal property tax on the machine for the first year, $1.250. What is the initial cost of the machine? A. $50,000 B. $53,000 C. $57,500 D $61,000 E. $62,250 2. Josephson Mining operates a gold mine in New Mexico. Acquisition, exploration, and development costs totaled $6.6 million. After the gold is extracted in approximately five years, Josephson is obligated to restore the land to its original condition, including constructing a wildlife preserve. The company's controller has provided the following three cash flow possibilities for the restoration costs: (I ) S600.000, 35% probability; (2)$650,000. 50% probability; and (3) $750,000, 15% probability. The company's credit-adjusted, risk- free rate of interest is 6% (PV factor 0.74726), what is the initial cost of the gold mine? A. $6,600,000 B. $483,851 C. $7,083,851 D. $6,126,149 E. None of the above. The Tinsley Company exchanged land that it had been holding for future plant expansion fo a more suitable parcel located farther from residential areas. Tinsley carried the land at its original cost of $70,000. According to an independent appraisal, the land current is worth 3. Tinsley paid $24,000 in cash to complete the transaction. At what value should Tinsley record the new parcel of land? (The exchange has commercial substance) A. $192,000 B. $70,000 C. $168,000 D. $94,000 E. None of the above.Explanation / Answer
Requirement 1: Initial Cost of the machine: Purchase Price 50000 Freight 3000 Installation 4500 Testing 3500 Initial Cost of the machine: 61000 Correct Option: D) $61000 Requirement 2: Correct Option A) $6600000 Requirement 3: Value of new parcel of land Value of exchanged land + cash paid $168000 + $24000 $192,000 Correct Option A) $192000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.