During the current year ending on December 31, BSP Company completed the following transactions: a. On January 1, purchased a patent for $22,000 cash (estimated useful life, five years). b. On January 1, purchased another business for $163,000 cash, including $11,000 for goodwill. The assets included accounts receivable with a fair value of $11,000 and property and equipment with a fair value of $141,000 (with a residual value of $14,805 and estimated useful life of 10 years). The company assumed no liabilities. Goodwill has an indefinite life. c. On December 31, constructed a storage shed on land leased from D. Heald. The cost of the shed was $29,600. The company uses straight-line depreciation. The lease will expire in eight years. (Amounts spent to enhance leased property are capitalized as intangible assets called Leasehold Improvements.) d. Total expenditures for ordinary repairs were $5,800 during the current year. e. On December 31 of the current year, sold Machine A for $6,300 cash. Original cost was $24,000; accumulated depreciation to December 31 of the prior year was $15,680 (on a straight-line basis with a $4,400 residual value and five-year useful life). Record the depreciation expense in transaction e(1) and the sale in transaction e(2). On December 31 of the current year, paid $5,600 for a complete reconditioning of Machine B acquired on January 1 of the prior year. Original cost, $78,500; accumulated depreciation to December 31 of the prior year was $3.500 (on a straight-line basis with a $8,500 residual value and 20-year useful life). 5 Part 1
During the current year ending on December 31, BSP Company completed the following transactions: a. On January 1, purchased a patent for $22,000 cash (estimated useful life, five years). b. On January 1, purchased another business for $163,000 cash, including $11,000 for goodwill. The assets included accounts receivable with a fair value of $11,000 and property and equipment with a fair value of $141,000 (with a residual value of $14,805 and estimated useful life of 10 years). The company assumed no liabilities. Goodwill has an indefinite life. c. On December 31, constructed a storage shed on land leased from D. Heald. The cost of the shed was $29,600. The company uses straight-line depreciation. The lease will expire in eight years. (Amounts spent to enhance leased property are capitalized as intangible assets called Leasehold Improvements.) d. Total expenditures for ordinary repairs were $5,800 during the current year. e. On December 31 of the current year, sold Machine A for $6,300 cash. Original cost was $24,000; accumulated depreciation to December 31 of the prior year was $15,680 (on a straight-line basis with a $4,400 residual value and five-year useful life). Record the depreciation expense in transaction e(1) and the sale in transaction e(2). On December 31 of the current year, paid $5,600 for a complete reconditioning of Machine B acquired on January 1 of the prior year. Original cost, $78,500; accumulated depreciation to December 31 of the prior year was $3.500 (on a straight-line basis with a $8,500 residual value and 20-year useful life). 5 Part 1
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Required information
P8-6 (Algo) Recording Journal Entries Related to Various Long-Lived Assets LO8-2, 8-3, 8-6
[The following information applies to the questions displayed below.)
During the current year ending on December 31, BSP Company completed the following transactions:
a. On January 1, purchased a patent for $22,000 cash (estimated useful life, five years).
b. On January 1, purchased another business for $163,000 cash, including $11,000 for goodwill. The assets included.
accounts receivable with a fair value of $11,000 and property and equipment with a fair value of $141,000 (with a
residual value of $14,805 and estimated useful life of 10 years). The company assumed no liabilities. Goodwill has an
indefinite life.
c. On December 31, constructed a storage shed on land leased from D. Heald. The cost of the shed was $29,600. The
company uses straight-line depreciation. The lease will expire in eight years. (Amounts spent to enhance leased
property are capitalized as intangible assets called Leasehold Improvements.)
d. Total expenditures for ordinary repairs were $5,800 during the current year.
e. On December 31 of the current year, sold Machine A for $6,300 cash. Original cost was $24,000; accumulated
depreciation to December 31 of the prior year was $15,680 (on a straight-line basis with a $4,400 residual value and
five-year useful life). Record the depreciation expense in transaction e(1) and the sale in transaction e(2).
On December 31 of the current year, paid $5,600 for a complete reconditioning of Machine B acquired on January 1 of
the prior year. Original cost, $78,500; accumulated depreciation to December 31 of the prior year was $3,500 (on a
straight-line basis with a $8,500 residual value and 20-year useful life).
P8-6 Part 1
Required:
1. Record journal entries for transactions (a) through (f).
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Transcribed Image Text:View transaction list View Journal entry worksheet
/
i
No
1
2
3
4
5
6
7
Transaction
a
b
C
d
e(1)
e(2)
f
Amortization expense
Patent
Depreciation expense
Accumulated depreciation
No journal entry required
No journal entry required
Depreciation expense
Accumulated depreciation :
Accumulated depreciation
Cash
Property and equipment
Gain on sale of machine
General Journal
Depreciation expense
Anruimidated depreciation
Debit
2,200
Credit
2,200
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