Question

On January 15, 2021, Vancey Company paid property taxes on its factory building for the calendar year 2021 in the amount of $1,080,000. In the first week of April 2021, Vancey made unanticipated major repairs to its plant equipment at a cost of $2,700,000. These repairs will benefit operations for the remainder of the calendar year. How should these expenses be reflected in Vancey's quarterly income statements

Answer 1

Answer and Explanation:

The presentation is presented below:

Particulars 3/31/21 6/30/21 9/30/21 12/31/21

Property taxes $270,000 $270,000 $270,000 $270,000

Repairs $900,000 $900,000 $900,000

Total $270,000 $1,170,000 $1,170,000 $1,170,000

The property taxes is divided into four quarters i.e

= $1,080,000 ÷ 4 quarters

= $270,000

While the repairs are divided into 3 quarters i.e

= $2,700,000 ÷ 3 quarters

= $900,000