Accounting Challenge 7.1

Accounting Decision Files

Property, Plant, and Equipment

About this activity

Campus Cycle Repair · you gather the facts by interviewing, not by reading a handout.

Campus Cycle Repair has invested in equipment for the shop, and the costs did not all arrive on a single invoice. There was the purchase itself, plus getting it there, setting it up, and keeping it running. Some of that belongs in the asset and some belongs in this period's expenses. Your job is to sort out which is which, and then determine how the equipment should be depreciated.

Watch the tutorial video

Length: 14 minutes, 56 seconds

Open the tutorial video in a new window

Interview Riley and Morgan

Neither character has the whole picture. Morgan can tell you what the records show; Riley can tell you why. Ask real questions, follow up on anything that does not add up, and reconcile the two accounts before you answer anything.

Riley — founder and owner. Knows the business story and what actually happened, but does not keep the books. Optimistic, cautious about debt, and candid when working from memory.
Interview Riley

Morgan — handled the accounting records. Organized, practical, and precise. Morgan knows what was recorded and how.
Interview Morgan

Questions worth asking

You may ask your own questions. These will get you started.

Riley, why did Campus Cycle Repair invest in mobile service, and what did the business purchase?
Riley, what did you pay related to the van, what was each payment for, and when was the van ready to use? Which costs came before it could be used and which came after?
Riley, what happened with the old wheel-alignment stand, and what other expenditures came later in the year?
Morgan, which van-related costs were capitalized and which were expensed, and why? What was the van's recorded cost?
Morgan, how did you calculate this year's depreciation for the van and for the diagnostic system, and what is each asset's book value at year-end?
Morgan, how did you determine whether the sale of the old equipment produced a gain or a loss?
Morgan, how should the routine calibration and the major upgrade be recorded, and why are the two treated differently?
Riley, what are you considering for a second phase of the mobile-service expansion, and what did the first phase teach you about estimating what an asset really costs?
Morgan, what do the accounting records establish about the mobile-service expansion so far, and what would Riley still need to know before committing to a second phase?
Based on both interviews, which expenditures became part of an asset's cost, which became expenses, and what evidence supports each treatment?

Then answer in Canvas

The questions are in Canvas, in the quiz named Accounting Challenge 7.1.

Interview both characters before you start the quiz.
The questions ask about evidence you gather in the interviews, so the tutorial video alone will not be enough.
You have one attempt, and you will get 5 questions.
Questions appear one at a time, and you cannot return to a question after you submit it.
Keep this page open in a second window so you can go back to an interview while you work.
Do not paste quiz questions into the interviews. Gather facts, then reason from them.

If something does not work

Email Dr. Tietz at wtietz@kent.edu with your section number and what happened. Do not wait until the due date has passed.