On December 1, 2024, Microsoft Corporation purchased a new cloud computing server farm for $15 million. The company paid $3 million in cash and financed the remaining $12 million with a 5-year loan at an annual interest rate of 4%, with interest payable annually on December 1. The server farm is expected to have a useful life of 7 years with no salvage value. Microsoft uses the straight-line method for depreciation. Additionally, the company incurred $500,000 in installation and testing costs, which were paid in cash. Record the journal entries for: The purchase and financing of the server farm The payment of installation and testing costs The adjusting entry for depreciation on December 31, 2024 The adjusting entry for accrued interest on December 31, 2024
On December 1, 2024, Microsoft Corporation purchased a new cloud computing server farm for $15 million. The company paid $3 million in cash and financed the remaining $12 million with a 5-year loan at an annual interest rate of 4%, with interest payable annually on December 1. The server farm is expected to have a useful life of 7 years with no salvage value. Microsoft uses the straight-line method for depreciation. Additionally, the company incurred $500,000 in installation and testing costs, which were paid in cash. Record the journal entries for: The purchase and financing of the server farm The payment of installation and testing costs The adjusting entry for depreciation on December 31, 2024 The adjusting entry for accrued interest on December 31, 2024
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:On December 1, 2024, Microsoft Corporation purchased a new
cloud computing server farm for $15 million. The company paid
$3 million in cash and financed the remaining $12 million with a
5-year loan at an annual interest rate of 4%, with interest payable
annually on December 1. The server farm is expected to have a
useful life of 7 years with no salvage value. Microsoft uses the
straight-line method for depreciation. Additionally, the company
incurred $500,000 in installation and testing costs, which were
paid in cash. Record the journal entries for: The purchase and
financing of the server farm The payment of installation and
testing costs The adjusting entry for depreciation on December
31, 2024 The adjusting entry for accrued interest on December
31, 2024
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