Can you please solve this general accounting question? On July 1, 2013, X Company purchased a machine by payinga $20,000 down payment and signing a noninterest-bearingnote for $360,000, calling for payments of $6,000 per monthfor the next 5 years. X also paid an additional $10,000 fordelivery and installation. The equipment could have beenpurchased for $310,000 on the date of acquisition. Theequipment has a 10-year useful life with no salvage value andwill be depreciated on a straight-line basis. What will be theamount of depreciation recognized in 2014?

Step 1: Define Non-Interest-Bearing NotesWhen a company issues a non-interest-bearing note to pay…

Answered: On July 1, 2013, X Company purchased a…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 6EA: Calico Inc. purchased a patent on a new drug. The patent cost $21,000. The patent has a life of...

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Calico Inc. purchased a patent on a new drug. The patent cost $21,000. The patent has a life of twenty years, but Calico only expects to be able to sell the drug for fifteen years. Calculate the amortization expense and record the journal for the first-year expense.
For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a ten-year remaining legal life was purchased for $300,000. The patent will be usable for another eight years. B. A patent was acquired on a new smartphone. The cost of the patent itself was only $24,000, but the market value of the patent is $600,000. The company expects to be able to use this patent for all twenty years of its life.
For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a seventeen-year remaining legal life was purchased for $850,000. The patent will be usable for another six years. B. A patent was acquired on a new tablet. The cost of the patent itself was only $12,000, but the market value of the patent is $150,000. The company expects to be able to use this patent for all twenty years of its life.
Calico Inc. purchased a patent on a new drug it created. The patent cost $12,000. The patent has a life of twenty years, but Calico expects to be able to sell the drug for fifty years. Calculate the amortization expense and record the journal for the first years expense.
Oscar Company acquired a patent on a manufacturing process on January 1, 2015 for $5,100,000. It was expected to have a 12 year life and no residual value. Oscar uses straight-line amortization for patents. On December 31, 2016, the expected future cash flows from the patent are $387,500 per year for the next ten years. The present value of these cash flows, discounted at Oscar’s market interest rate, is $3,050,000. At what amount should the patent be carried on the December 31, 2016 balance sheet?
On January 1, 20X1, Beard Company purchased a machine for $620,000. The machine is expected to have a 10-year life, with no salvage value, and will be depreciated by the straight-line method. On January 1, 20X1, it leased the machine to Child Company for a three-year period at an annual rental of $128,000 to be paid at the end of each year. Beard could have sold the machine for $817,298 instead of leasing it. Child does not know the implicit rate in the lease, but it has an incremental rate of 9%. Child Company has a December 31 reporting year. Required: Why is this an operating lease for Child Company? What are the amounts of the right-of-use asset and lease liability that Child Company should report on its balance sheet at December 31, 20X1? How much lease expense should Child Company recognize in 20X1?
On January 1, 20X1, Beard Company purchased a machine for $620,000. The machine is expected to have a 10-year life, with no salvage value, and will be depreciated by the straight-line method. On January 1, 20X1, it leased the machine to Child Company for a three-year period at an annual rental of $128,000 to be paid at the end of each year. Beard could have sold the machine for $817,298 instead of leasing it. Child does not know the implicit rate in the lease, but it has an incremental rate of 9%. Child Company has a December 31 reporting year. Use tables (PV of 1, PVAD of 1, and PVOA of 1) (Use the appropriate factor(s) from the tables provided. Round your intermediate calculations and final answers to the nearest whole dollar amount.) Required: Why is this an operating lease for Child Company? What are the amounts of the right-of-use asset and lease liability that Child Company should report on its balance sheet at December 31, 20X1? How much lease expense should Child Company…
During the current year, Adrienne Company purchased a second hand machine at a price of P5,000,000. A cash payment of P1,000,000 was made and a two-year, noninterest bearing note was issued for the balance of P4,000,000. Recent transactions involving similar machine indicate that the used machine has a second hand market value of P4,500,000. A new machine would cost of P6,500,000. The following costs were incurred during the year. Cost of removing old machine that is replaced Cash proceeds from the sale of the old machine replaced General overhaul and repairs to recondition machine prior to use Cost of spare parts to cover breakdown 350,000 100,000 220,000 80,000 Cost of installation 180,000 Cost of testing machine prior to use Cost of hauling the machine from vendor to entity premises Cost of repairing damage to machine caused when the machine was dropped during installation 150,000 40,000 50,000 Repairs incurred during the first year of operation Safety device added to the machine…
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Lob Corporation purchased a new delivery truck on March 1, 2024, for $60,000. The company paid $15,000 in cash as a down payment and financed the remaining $45,000 with a 5-year loan at an annual interest rate of 6%. The truck has an estimated useful life of 8 years and a salvage value of $4,000. XYZ Corporation uses the straight-line method for deprecation. The company makes monthly loan payments, with the first payment due on April 1, 2024. Each monthly payment includes both principal and interest. XYZ Corporation's accounting period ends on December 31. Prepare the journal entries for the initial purchase of the truck on March 1, 2024, the first loan payment on April 1, 2024, and the adjusting entries for depreciation and interest accrual on December 31, 2024. On July 1, 2024, ABC Company purchased a new piece of manufacturing equipment for $80,000. The company paid $20,000 in cash as a down payment and financed the remaining $60,000 with a 4-year loan at an annual interest rate of…
Burrell Company purchased a machine for $33,000 on January 2, 2016. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $16,500 each year. The tax rate is 25%. Required: Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double-declining-balance depreciation methods. Assume that the machine is the company's only asset.
In January 1, 2015, Fun company purchased Company A for $40,000 in cash and paid immediately. Fun company assumed all of Company A's assets and assumed Company A's liabilities. company A has assets valued at $60,000 and liabilities valued at $50,000. question:suppose fun company estimates that company A will only be useful to them for 10 years. What is the annual amortization expense for the goodwill of company Z?

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