Cheesesteak's Sandwich Shop had the following long-term asset balances as of January 1, 2024: Cost Accumulated Depreciation Book Value Land $83,000 0 $83,000 Building 558,000 $(106,020) 451,980 Equipment 131,400 (29,600) 101,800 Patent 120,000 (48,000) 72,000 Additional information: Cheesesteak's purchased all the assets at the beginning of 2022. The building is depreciated over a 20-year service life using the double - declining - balance method and estimating no residual value. The equipment is depreciated over a 8-year useful life using the straight-line method with an estimated residual value of $13,000. The patent is estimated to have a five-year service life with no residual value and is amortized using the straight-line method. Depreciation and amortization have been recorded for 2022 and 2023 (first two years). For the year ended December 31, 2024 (third year), record depreciation expense for buildings and equipment. Land is not depreciated.

Cheesesteak's Sandwich Shop had the following long-term asset balances as of January 1, 2024: Cost Accumulated Depreciation Book Value Land $83,000 0 $83,000 Building 558,000 $(106,020) 451,980 Equipment 131,400 (29,600) 101,800 Patent 120,000 (48,000) 72,000 Additional information: Cheesesteak's purchased all the assets at the beginning of 2022. The building is depreciated over a 20-year service life using the double - declining - balance method and estimating no residual value. The equipment is depreciated over a 8-year useful life using the straight-line method with an estimated residual value of $13,000. The patent is estimated to have a five-year service life with no residual value and is amortized using the straight-line method. Depreciation and amortization have been recorded for 2022 and 2023 (first two years). For the year ended December 31, 2024 (third year), record depreciation expense for buildings and equipment. Land is not depreciated.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Cop
Bruce Company acquired a machinery on April 1, 2020. Cost P 1,200,000 Residual Value P 120,000 Estimated Useful Life 8 years What is the depreciation for 2020 using sum of years’ digits? A. P240,000 B. P180,000 C. P120,000 D. P160,000 What is the depreciation for 2021 using sum of years’ digits? A. P157,500 B. P217,500 C. P210,000 D. P105,000
an entity acquired furniture and fittings on 1 July 2021 for $42 000. The estimated useful life of the furniture and fittings at acquisition date was 8 years and the residual value was $2000. The company sold all the furniture and fittings on 1 January 2027 for $18 000. The journal entry to reflect the sale is:
Intangibles: Balance Sheet Presentation and Income Statement Effects Clinton Company has provided information on intangible assets as follows: A patent was purchased from Lou Company for $1,680,000 on January 1, 2018. Clinton estimated the remaining useful life of the patent to be 10 years. The patent was carried in Lou's accounting records at a net book value of $1,440,000 when Lou sold it to Clinton. During 2019, a franchise was purchased from Rink Company for $500,000. In addition, 6% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $1,800,000. Clinton estimates the useful life of the franchise to be 10 years and takes a full year's amortization in the year of purchase. Clinton incurred R&D costs in 2019 as follows: Materials and equipment $125,000 Personnel 162,000 Indirect costs 78,000 $365,000 Clinton estimates that these costs will be recouped by December 31, 2020. On January 1, 2019, Clinton estimates, based on new…
The intangible assets section of Novak Corporation's balance sheet at December 31, 2025, is presented here. Patents ($78,000 cost less $7,800 amortization) Copyrights ($46,800 cost less $32,760 amortization) Total $70,200 14,040 $84,240 The patent was acquired in January 2025 and has a useful life of 10 years. The copyright was acquired in January 2019 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2026. Jan. 2 Jan.-June Sept. 1 Oct. 1 Paid $60,840 legal costs to successfully defend the patent against infringement by another company. Developed a new product, incurring $299,000 in research and development costs. A patent was granted for the product on July 1, and its useful life is equal to its legal life. Legal and other costs for the patent were $26,400. Paid $52,000 to a quarterback to appear in commercials advertising the company's products. The commercials will air in September and October. Acquired a copyright for…
Brown Company paid cash to purchase the assets of Coffee Company on January 1, 2019. Information is as follows: Total cash paid $4,500,000 Assets acquired: Land $800,000 Building $700,000 Machinery $800,000 Patents $700,000 The building is depreciated using the double-declining balance method. Other information is: Salvage value $70,000 Estimated useful life in years 20 The machinery is depreciated using the units-of-production method. Other information is: Salvage value, percentage of cost 10% Estimated total production output in units 100,000 Actual production in units was as follows: 2019: 20,000 2020: 20,000 2021: 30,000 The patents are amortized on a straight-line basis. They have no salvage value. Estimated useful life of patents in years 40 On December 31, 2020, the value of the patents was estimated to be $100,000 Where applicable, the company uses the ½ year rule to calculate depreciation and amortization expense in the years of acquisition and disposal. Its fiscal year-end is…
Kingsnake Company acquired a machine on January 1, 2019, at a cost of P120,000. It was expected to have a useful economic life of 10 years. Kingsnake uses the calendar year basis. On December 31, 2021, the machine was appraised as having a gross replacement cost of P150,000. Kingsnake applies the revaluation model in valuing this class of property, plant and equipment after its initial recognition. 3) How much should be credited to revaluation surplus on December 31, 2021? A. 30,000 B. 105,000 C. 21,000 D. 9,000 4) What is the balance of the revaluation surplus account on December 31, 2022 assuming that piecemeal realization of revaluation surplus is in order? A. 30,000 B. 21,000 C. 18,000 D. 15,000
FDN Company acquires a building on April 1, 2021 at a cost of P52,500,000. The building has an estimated useful life of 40 years and an estimated salvage value of P500,000. How much is the depreciation expense for the year ended December 31, 2021?
France company disclosed that the depreciation policy of on machinery is as follows: • A full year depreciation is taken in the year of acquisition. • No depreciation is taken in the year of disposition. • The straight line method is used. On June 30, 2022, the entity sold for P 2,300,000 a machine acquired in on April 1, 2019 for P 4,200,000. The machinery has estimated useful life of five years and a residual value of P 600,000. 15. the journal entry on June 30, 2022 would be:
Red Velvet Services has the following assets as of December 31, 2017 Date Acquired 4. Salvage Value P1,500,000 Useful Life Cost P16,000,000 10 years 5 years Building Jan. 1, 2015 50,000 July 1, 2016 March 1, 2017 7,000,000 1,900,000 Furniture & Fixtures Equipment 8 years 100,000 Required: Cive the adjusting en tOTecord utpretiatioITTOr each asset in 2015, 2010, dnu 2017 Give the depreciation expense of each asset TOI Cach year Oive the d. Give the entry on March 1, 2018 when the equipment was sold for P500,000 b. tien of each accot foreach voar C.
Sherwin Company uses straight line depreciation for its property, plant, and equipment, which, stated at cost, consisted of the following: 2022 2021 Land 250,000 250,000 Buildings 1,950,000 1,950,000 6,500,000 8,700,000 Machinery and equipment 6,950,000 9,150,000 Total Less: Accumulated depreciation 4.000.000 5,150,000 3.700,000 5,000,000 The depreciation for 2022 and 2021 was P550,000 and P500,000, respectively. What amount was debited to accumulated depreciation during 2022 because of property, plant, and equipment retirements?
Discuss the appropriate accounting treatment for the following intangible assets on 30 June2022. No entries required. a)Apublishing company purchased the magazine title"Potato Farmer" in 2019 for $2.5 million. An additional $200.000 was spent in 2020 to market the publishing title.On 30 June 2022 the publishing company believes the publishing title can be sold for $20 million. b) A company purchased the music rights to all the works of the famous band The lnsects in2018 for $15,000,000.The rights provided the company with the ability to use the music rights forever. On 30 June 2022 following a scandal involving one of the band members the frm estimates the likely fair value of the music rights is $5,000,000. c) On 30 June 2022 a hair loss treatment company acquired the results of research conducted into possible cures for male baldness from the Western Southern University for $6,000,000. The company intends to progress the most promising parts of the research in 2023 with additional…