The following events took place at Pete\'s Painting Company during2008: a. On Ja

Question

The following events took place at Pete's Painting Company during2008:

a. On Jan 1, Pete bought a used truck for $14,000. He added a toolchest and side racks for ladders for $4,800. The truck is expectedto last four years and then be sold for $800. Pete usesstraight-line depreciation.
b. On Jan 1, he purchased several items at an auction for $2,400.These items had fair market values as follows:

10 cases of paint trays and rollercovers                $ 200
Storagecabinets                                                       600
Ladders andscaffolding                                         2,400

Pete will use all of the paint trays and roller covers this year.The storage cabinets are expected to last nine years; the laddersand scaffolding, four years.

c. On Feb 1, Pete paid the city $1,500 for a three-year license tooperate the business
d. On Sept 1, Pete sold an old truck for $4,800. The truck has cost$12,000 when it was purchased on Sept 1, 2003. It had been expectedto last eight years and have a salvage value of $800.

1. For each situation, explain the value assigned to the asset whenit was purchased [or for (d), the book value when sold].
2. Determine the amount of depreciation or other expense to berecorded for each asset for 2008.
3. How would these assets appear on the balance sheet as of Dec 31,2008

Explanation / Answer

x.XOn Jan 1, Pete bought a used truck for $14,000. He added

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