Brown Company paid cash to purchase the assets of Coffee Company on January 1, 2019. Information is as follows: Total cash paid Assets acquired: Land Building Machinery S3,500,000 se00,000 5500,000 5900,000 5500,000 Patents The building is depreciated using the double-declining balance method. Other information is: Salvage value Estimated useful life in years S50,000 The machinery is depreciated using the units-of-production method. Other information is: Salvage value, percentage of cost Estimated total production output in Actual production in units was as 2019 2020 2021 10% 200,000 40,000 60,000 20,000 The patents are amortized on a straight-line basis. They have no salvage va Estimated useful life of patents in On December 31, 2020, the value of the patents was estimated to be 30 $100,000 Where applicable, the company uses the % year rule to calculate depreciation and amortization expense in the years of acquisition and disposal. Its fiscal year-end is December 31. The machinery was traded on December 2, 2021 for new machinery. Other information is: $240,000 $288,000 $403,200 20 $8,064 Fair value of old machinery Trade-in allowance List price for new machinery Estimated useful life of new machinery in Estimated salvage value of new The new machinery is depreciated using the straight-line method and On August 14, 2023, an addition was made. This amount was material. Other relevant information is as follows: Amount of addition, paid in cash $100,000 Number of years of useful life from 2023 (original machinery and addition): Salvage value, percentage of addition 30 10% Required: Prepare journal entries to record: 1 The purchase of the assets of Coffee. 2 Depreciation and amortization expense on the purchased assets for 2019 3 The decline (if any) in value of the patents at December 31 4 The trade-in of the old machinery and purchase of the new 5 Depreciation on the new machinery for 2021. 6 Cost of the addition to the machinery on August 14, 2023. 7 Depreciation on the new machinery for 2023.
Brown Company paid cash to purchase the assets of Coffee Company on January 1, 2019. Information is as follows: Total cash paid Assets acquired: Land Building Machinery S3,500,000 se00,000 5500,000 5900,000 5500,000 Patents The building is depreciated using the double-declining balance method. Other information is: Salvage value Estimated useful life in years S50,000 The machinery is depreciated using the units-of-production method. Other information is: Salvage value, percentage of cost Estimated total production output in Actual production in units was as 2019 2020 2021 10% 200,000 40,000 60,000 20,000 The patents are amortized on a straight-line basis. They have no salvage va Estimated useful life of patents in On December 31, 2020, the value of the patents was estimated to be 30 $100,000 Where applicable, the company uses the % year rule to calculate depreciation and amortization expense in the years of acquisition and disposal. Its fiscal year-end is December 31. The machinery was traded on December 2, 2021 for new machinery. Other information is: $240,000 $288,000 $403,200 20 $8,064 Fair value of old machinery Trade-in allowance List price for new machinery Estimated useful life of new machinery in Estimated salvage value of new The new machinery is depreciated using the straight-line method and On August 14, 2023, an addition was made. This amount was material. Other relevant information is as follows: Amount of addition, paid in cash $100,000 Number of years of useful life from 2023 (original machinery and addition): Salvage value, percentage of addition 30 10% Required: Prepare journal entries to record: 1 The purchase of the assets of Coffee. 2 Depreciation and amortization expense on the purchased assets for 2019 3 The decline (if any) in value of the patents at December 31 4 The trade-in of the old machinery and purchase of the new 5 Depreciation on the new machinery for 2021. 6 Cost of the addition to the machinery on August 14, 2023. 7 Depreciation on the new machinery for 2023.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 8P: Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of...
Related questions
Topic Video
Question
please help with the
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College