Question

During year 1, Yvo Corp. installed a production assembly line to manufacture furniture. In year 2, Yvo purchased a new machine and rearranged the assembly line to install this machine. The rearrangement did not increase the estimated useful life of the assembly line, but it did result in significantly more efficient production. The following expenditures were incurred in connection with this project: Machine $75,000 Labor to install machine 14,000 Parts added in rearranging the assembly line to provide future benefits 40,000 Labor and overhead to rearrange the assembly line 18,000 What amount of the above expenditures should be capitalized in year 2

Answer 1

Answer: $147000

Step-by-step explanation:

The amount of the above expenditures that should be capitalized in year 2 will be:

Machine = $75000

Add: Labor = $14000

Add: Parts added = $40000

Add: Labor and overhead to rearrange the assembly line = $18,000

Amount capitalized = $75000 + $14000 + $40000 + $18000

= $147000