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that means only the costs after recognition are capitalized.
thank you sir
concept clearedSorry sir I answered, I knew the answer, so I replied
Firstly deduct the difference of trial balance, which gives us value of 7182 less in credit or more in debit. now there can be 2 possibilities either an error has increased the debit balance or decreased the credit balance.
A. the omission of insurance exp in debit by 7182, if corrected would increase the debit side even further, doubling the difference.
B. the settlement discount received and purchase account are interchanged the values entered and credited are right just the account is wrong, so any movement from one to other won’t have any effect on trial balance.
C. cash sales of 7182 is an error of omission it would debit the cash and credit the sales but won’t effect the difference.
D. NOW D IS THE RIGHT ANSWER. return outward is the opposite of purchase, meaning when you buy goods you debit them and when they are returned to supplier they are credited. while the amount of 3591 was debited instead of being credited, so firstly to correct, remove the debit the amount by crediting with 3591 then to add the real returns the account will be credited with 3591 again. making trial balance balancing at 812011 debit credit both.
while these entries will be setoff by the debit in suspense account.
I hop you understood.Project A 34,000
Project B 78,870
Project C ($290,000 + $19,800) × 4/36 34,422
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147,292
Sir in this, I don’t understand the reason why project B’s cost is 78870. while it is the development cost and the cost of “27800”(from the question) is the cost incured after the completion, and it is not included. Did they not capitalize the asset?
