CHAPTER 23: PROPERTY, PLANT, AND EQUIPMENT

Installment price 350,000.00

Property, plant and equipment 290,000.00 Cash price 290,000.00
Discount on note payable 60,000.00 Interest expense 60,000.00
Cash 50,000.00
Note Payable 300,000.00
60,000.00
Note Payable 100,000.00 300000 30,000.00
Cash 100,000.00 200000 20,000.00
100000 10,000.00
600000 60,000.00

PV of downpayment 100,000.00 Note Payable 600,000.00

PV of installments 497,400.00 PV of the note 497,400.00
597,400.00 102,600.00

Terms Payment Interest Principal Carrying amount

497,400.00
1 200,000.00 49,740.00 150,260.00 347,140.00
2 200,000.00 34,714.00 165,286.00 181,854.00
3 200,000.00 18,185.40 181,814.60 39.40
23-15

Payments 200,000.00
PV of annuity due 5.71
Initial cost 1,142,400.00 D

Payments 1,600,000.00
PV of note 1,142,400.00
Discount 457,600.00

PV of note 1,142,400.00
Discount rate 11%
Interest expense 125,664.00

Terms Payment
Interest Principal Carrying amount
1,142,400.00
1 ## - 200,000.00 942,400.00
2 ## 103,664.00 96,336.00 846,064.00
3 ## 93,067.04 106,932.96 739,131.04
4 ## 81,304.41 118,695.59 620,435.45
5 ## 68,247.90 131,752.10 488,683.35
6 ## 53,755.17 146,244.83 342,438.52
7 ## 37,668.24 162,331.76 180,106.76
8 ## 19,811.74 180,188.26 (81.50)

23-17

Press 3,000,000.00
Discount 150,000.00
Net price 2,850,000.00
Cost of freight 50,000.00
Installation cost 200,000.00
Cost of press 3,100,000.00

Welding machine 2,000,000.00

Discount 200,000.00
Net price 1,800,000.00

Total cost 4,900,000.00

23-19

Machine 1 2,825,000.00
Machine 2 2,400,000.00
5,225,000.00
 23-20
Price 3,600,000.00
Discount 180,000.00
Net price 3,420,000.00
Shipping 90,000.00
Installation 240,000.00
Cost 3,750,000.00

23-22

CA of old asset 600,000.00 Accumulated Depreciation 600,000.00

Cash difference 200,000.00 PPE - new 900,000.00
Cost of new asset 900,000.00 PPE - old 1,200,000.00
Gain 100,000.00 Cash 200,000.00
Gain on exchange 100,000.00
Fair value of new asset 700,000.00
Cash difference 200,000.00
Cost of new asset 900,000.00
 23-23

CA of old asset 1,700,000.00

Cash difference 600,000.00
Cost of new asset 2,050,000.00
Loss (250,000.00)

Cost of new asset - cash price 2,050,000.00

23-24

Carrying amount 1,200,000.00

Cash difference 200,000.00
Cost of new asset 1,400,000.00

23-25

Carrying amount 2,000,000.00

Cash 100,000.00
Cost of new inventory 2,300,000.00
Gain 200,000.00

Fair value of new inventory 2,200,000.00

Cash difference 100,000.00
Cost of new inventory 2,300,000.00
23-26

Carrying amount 1,000,000.00

Cash difference 300,000.00
Cost of new inventory 1,300,000.00

Carrying amount 1,400,000.00

Cash difference - received 300,000.00
Cost of new inventory 1,100,000.00