During Year 3, Carrington Company Made the Following Expenditures Relating

question 171

Multiple Choice

During Year 3, Carrington Company made the following expenditures relating to plant machinery and equipment:
· Continuing, frequent, and low cost repairs $46,000
· Special long-term protection devices were attached to ten machines 11,000
· A broken gear on a machine was replaced 5,000

How much should be charged to repairs and maintenance in Year 3?

• A)$46,000
• B)$51,000
• C)$57,000
• D)$41,000
• E)none of the above

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Definitions:

Prior Service Cost Amortization

involves the gradual recognition of the expenses related to pension plan benefits earned by employees in previous periods, over current and future periods.

Defined Benefit Pension Plan

A retirement plan where employee benefits are calculated using a formula that considers factors like length of employment and salary history, with the employer bearing the investment risk.

Projected Benefit Obligation

The present value of all the benefits earned by employees, according to their pension plan up to the measurement date.

Amortization of Prior Service Cost

The process of gradually recognizing the costs of benefits earned by employees in earlier periods in the pension expense over the service life of the employees.