Question

REQUIRED Indicate whether the following property, plant, and equipment related transactions increased (I),
decreased (D), or had no effect (NE) on the financial statement elements below.

Cash
Noncash
Assets
Liabilities Revenues /
Gains
Expenses /Losses

a) Acquired a machine by issuing a 5%, 5-
year, $100,000 note with no down
payment.

b) Incurred and paid annual interest cost of
$40,000, including $8,000 of capitalized
interest.

c) Spent $40,000 to upgrade an existing
building. The upgrades increased the
original useful life of the building.

d) Spent $5,000 for routine maintenance on
existing manufacturing equipment.
Sold a piece of land for $125,000. The
original cost of the land was $105,000.

Answer 1

A. When a machinery was acquired, by issuing a 5%,5- year $100,000 note, with no down payment:-

Cash (NE)

Noncash(I)

Assets(I)

Liabilities (I)

Gains(NE)

expenses (NE).

B. Incurred and paid annual interest cost of $40,000, including ,$8,000 of capitalised interest.

Cash(D)

Noncash(NE)

Assets:-(NE(

Liabilities (D)

Gains,(NE)

expenses (D)

C.Cash(D)

Non cash (NE)

ASSETS (I)

LIABILITIES (NE)

GAINS(NE)

EXPENSES (I)

D.Cash(D and I respectively)

Non cash( NE for both)

Asset's (D)

Liabilities ( NE)

Gains(I)

Expenses ( D and NE)