Operating Assets (Student) [Protected Viewl- Excel ACROBAT Tell me what you want
ID: 2564693 • Letter: O
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1. Entry to record construction of a building on newly acquired land for $90,000 Account Title Debit Credit Building 90000 Cash 90000 2. Record a basket purchase for $90,000 in cash with respect to the appraised values of Land : $35,000 , Buildings : $45,000 , Equipment : $25,000 ($90,000 is allocated to the assets based on the appraised values) Total Land Building Equipent Appraised values 105000 35000 45000 25000 Cash paid 90000 30000 38571 21429 The entry will be as follows: Account Title Debit Credit Land 30000 Building 38571 Equipment 21429 Cash 90000 3. Recording the sale of asset: Cost : 23,000 , Accumulated depreciation : 8,200 , Cash received : 15,000 Book value (23,000 - 8,2000) : 14,800, Gain on sale of asset 915,000 - 14,800) : 200 The entry will be as follows: Account Title Debit Credit Cash 15000 Accumulated depreciation 8200 Equipment 23000 Gain on sale of equipment 200 4. (a) Record depreciation using straight line method Cost : 45000 , Life = 15 years , Residula value = 6,000 Depreciable value = 45,000 - 6,000 = 39,000 Depreciation using straight line method = 39,000 / 15 = 2,600 Entry to record this is Account Title Debit Credit Depreciation expense 2600 Accumulated depreciation 2600 4. (b) After the first year the asset's total estimated life was changed to 9 years. Record the 2nd year depreciation. Depreciable value after first year = 39,000 - 2,600 = 36,400 Remaining estimated life of the asset = 8 years Annual depreciation = 36,400 / 8 = 4,550 Entry to record this is Account Title Debit Credit Depreciation expense 4550 Accumulated depreciation 4550 5. record depreciation using units of production method. Cost = 53,000 Estimated units production = 22,000 Residula value = 4,700 Units this year =3,000 Depreciable value = 53,000 - 4,700 = 48,300 2.195455 Depreciation per unit of production = 48,300 / 22,000 = 2.20 Depreciation for this year = 3,000 x 2.20 = 6,600 Entry to record this is Account Title Debit Credit Depreciation expense 6600 Accumulated depreciation 6600 6. Record 1st year depreciation using double declining method. Cost : $30,000 Residual value : $4,000 Asset life = 6 years Depreciation under straight line method = 100/6 = 16.67% 8658 Depreciation under double declining method = 16.67 x 2 = 33.3 % Depreciation for the first year =30,000 x 33.3% = 10,000 Entry to record this is Account Title Debit Credit Depreciation expense 10000 Accumulated depreciation 10000 Net value at the beginning of the second year = $30,000 - $10,000 = 20,000 Depreciation for the second year =20,000 x 33.3% = 6,667 Entry to record this is Account Title Debit Credit Depreciation expense 8667 Accumulated depreciation 8667 7. Record the first year amortization of the following patent. Cost : 45,000 Asset life = 15 years Annual amortization = 45,000 / 15 = 3,000 Entry to record this is Account Title Debit Credit Amortization expense 3000 Accumulated amortization - Patent 3000 8. Xerox Corp's trademark has totally lost its value. It renewable life is 20 years Its value is 68,000 , accum. Amort. is 23,000 Entry to record this is Account Title Debit Credit Loss on write off of trademark 45000 Accumulated amortization - Trademark 23000 Trademark 68000 9. A company purchased equipment and incurred the following costs: Price : 45,000 , Freight = 600 , Taxes =2,000 , Installation costs = 2,200 Repair for damages during shipping = 800. The capitalized amount for this asset = 45,000+600+2,000+2,200+800= 50,600.
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