Cost of Assets, Subsequent Book Values, and Balance Sheet Presentation The following events took place at Pete's Painting Company during 2017: a. On January 1, Pete bought a used truck for $15,000. He added a tool chest and side racks for ladders for $4,600. The truck is expected to last four years and then be sold for $1,200. Pete uses straight-line depreciation. b. On January 1, he purchased several items at an auction for $2,925. These items had fair market values as follows: 10 cases of paint trays and roller covers $200 Storage cabinets 900 Ladders and scaffolding 2,800 Pete will use all of the paint trays and roller covers this year. The storage cabinets are expected to last nine years; the ladders and scaffolding, four years. c. On February 1, Pete paid the city $1,440 for a three-year license to operate the business. d. On September 1, Pete sold an old truck for $4,280 that had cost $11,060 when it was purchased on September 1, 2012. It was expected to last eight years and have a salvage value of $500. Pete used the straight line method of depreciation. Required: 1. For each situation, determine the value assigned to the asset when it is purchased. For (d), determine the book value when it is sold. Do not round intermediate calculations. If required, round your final answers to the nearest dollar. Asset Relevant Value a. Recorded cost of truck b. Part 1 - recorded amount of supplies b. Part 2 - recorded cost of office furniture b. Part 3 - recorded cost of equipment c. Recorded cost of prepaid license d. Book value of truck at time of sale
Cost of Assets, Subsequent Book Values, and Balance Sheet Presentation The following events took place at Pete's Painting Company during 2017: a. On January 1, Pete bought a used truck for $15,000. He added a tool chest and side racks for ladders for $4,600. The truck is expected to last four years and then be sold for $1,200. Pete uses straight-line depreciation. b. On January 1, he purchased several items at an auction for $2,925. These items had fair market values as follows: 10 cases of paint trays and roller covers $200 Storage cabinets 900 Ladders and scaffolding 2,800 Pete will use all of the paint trays and roller covers this year. The storage cabinets are expected to last nine years; the ladders and scaffolding, four years. c. On February 1, Pete paid the city $1,440 for a three-year license to operate the business. d. On September 1, Pete sold an old truck for $4,280 that had cost $11,060 when it was purchased on September 1, 2012. It was expected to last eight years and have a salvage value of $500. Pete used the straight line method of depreciation. Required: 1. For each situation, determine the value assigned to the asset when it is purchased. For (d), determine the book value when it is sold. Do not round intermediate calculations. If required, round your final answers to the nearest dollar. Asset Relevant Value a. Recorded cost of truck b. Part 1 - recorded amount of supplies b. Part 2 - recorded cost of office furniture b. Part 3 - recorded cost of equipment c. Recorded cost of prepaid license d. Book value of truck at time of sale
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:2. Determine the amount of depreciation or other expense to be recorded for each asset for 2017. Do not round intermediate calculations. If required, round your final answers to the nearest dollar.
2017 Expense
Asset
Amount
a. Truck depreciation
b. Part 1 - supplies expense
b. Part 2 - office furniture depreciation
%24
b. Part 3 - equipment depreciation
%24
c. License amortization
%24
d. Part 1 - old truck depreciation
d. Part 2 - gain/loss on the sale (use the minus sign to indicate
a loss)
3. How would these assets appear on the balance sheet as of December 31, 2017?
Pete's Painting Company
Balance Sheet (Partial)
December 31, 2017
Current assets:
Property, plant, and equipment:
Total property, plant, and equipment, net
Transcribed Image Text:Cost of Assets, Subsequent Book Values, and Balance Sheet Presentation
The following events took place at Pete's Painting Company during 2017:
a. On January 1, Pete bought a used truck for $15,000. He added a tool chest and side racks for ladders for $4,600. The truck is expected to last four years and then be sold for $1,200. Pete uses straight-line depreciation.
b. On January 1, he purchased several items at an auction for $2,925. These items had fair market values as follows:
10 cases of paint trays and roller covers
$200
Storage cabinets
900
Ladders and scaffolding
2,800
Pete will use all of the paint trays and roller covers this year. The storage cabinets are expected to last nine years; the ladders and scaffolding, four years.
c. On February 1, Pete paid the city $1,440 for a three-year license to operate the business.
d. On September 1, Pete sold an old truck for $4,280 that had cost $11,060 when it was purchased on September 1, 2012. It was expected to last eight years and have a salvage value of $500. Pete used the straight line method of depreciation.
Required:
1. For each situation, determine the value assigned to the asset when it is purchased. For (d), determine the book value when it is sold. Do not round intermediate calculations. If required, round your final answers to the nearest dollar.
Asset
Relevant Value
a. Recorded cost of truck
$
b. Part 1 - recorded amount of supplies
b. Part 2 - recorded cost of office furniture
%24
b. Part 3 - recorded cost of equipment
$
c. Recorded cost of prepaid license
$
d. Book value of truck at time of sale
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