The Snack Stop had the following long-term asset balances as of January 1, 2015: All of the assets were purchased at the beginning of 2013. The building is depreciated over a 20-year service life using the straight-line method and estimating no residual value. The equipment is depreciated over a 10-year useful life using the double-declining-balance method with an estimated residual value of $10,000. The patent is estimated to have an 8-year service life with no residual value and is amortized using the straight-line method. Depreciation and amortization has already been calculated for the first two years.Required:1. For the year ended December 31, 2015, record depreciation expense for buildings and equipment. Land is not depreciated.2. For the year ended December 31, 2015, record amortization expense for the patent.3. Calculate the book value for each of the four long-term assets at December 31,2015. ### Asset Depreciation and Book ValueUnderstanding the financial status and valuation of company assets is crucial for accurately reporting and analyzing business performance. The following table illustrates the cost, accumulated depreciation, and book value of various company assets:| Asset | Cost | Accumulated Depreciation | Book Value ||------------|-----------|--------------------------|------------|| **Land** | $90,000 | - | $90,000 || **Building** | $600,000 | ($60,000) | $540,000 || **Equipment** | $200,000 | ($72,000) | $128,000 || **Patent** | $80,000 | ($20,000) | $60,000 |#### Explanation:1. **Land**: - **Cost**: $90,000 - **Accumulated Depreciation**: Not applicable (land does not depreciate) - **Book Value**: $90,000 2. **Building**: - **Cost**: $600,000 - **Accumulated Depreciation**: ($60,000) - **Book Value**: $540,000 3. **Equipment**: - **Cost**: $200,000 - **Accumulated Depreciation**: ($72,000) - **Book Value**: $128,000 4. **Patent**: - **Cost**: $80,000 - **Accumulated Depreciation**: ($20,000) - **Book Value**: $60,000### Key Terms:- **Cost**: This is the initial amount paid to acquire the asset.- **Accumulated Depreciation**: The total depreciation expense recorded for an asset up to a specific point in its useful life.- **Book Value**: The net amount at which an asset is carried on the balance sheet. It is calculated as the cost of the asset minus its accumulated depreciation.### Breakdown of Asset Valuation:- **Land** does not depreciate and hence, its cost and book value remain the same at $90,000.- **Building** originally cost $600,000, and has accumulated $60,000 in depreciation, resulting in a book value of $540,000.- **Equipment** has incurred $72

Name: The Snack Stop had the following long-term asset balances as of Januar
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Description: The Snack Stop had the following long-term asset balances as of January 1, 2015: All of the assets were purchased at the beginning of 2013. The building is depreciated over a 20-year service life using the straight-line method and estimating no res

Depreciation is a method of reducing the value of recording of an assets as and when they are used…

Answered: The Snack Stop had the following…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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The Snack Stop had the following long-term asset balances as of January 1, 2015:

All of the assets were purchased at the beginning of 2013. The building is depreciated over a 20-year service life using the straight-line method and estimating no residual value. The equipment is depreciated over a 10-year useful life using the double-declining-balance method with an estimated residual value of $10,000. The patent is estimated to have an 8-year service life with no residual value and is amortized using the straight-line method. Depreciation and amortization has already been calculated for the first two years.

Required:
1. For the year ended December 31, 2015, record depreciation expense for buildings and equipment. Land is not depreciated.
2. For the year ended December 31, 2015, record amortization expense for the patent.
3. Calculate the book value for each of the four long-term assets at December 31,2015.

### Asset Depreciation and Book Value

Understanding the financial status and valuation of company assets is crucial for accurately reporting and analyzing business performance. The following table illustrates the cost, accumulated depreciation, and book value of various company assets:

| Asset | Cost | Accumulated Depreciation | Book Value |
|------------|-----------|--------------------------|------------|
| **Land** | $90,000 | - | $90,000 |
| **Building** | $600,000 | ($60,000) | $540,000 |
| **Equipment** | $200,000 | ($72,000) | $128,000 |
| **Patent** | $80,000 | ($20,000) | $60,000 |

#### Explanation:
1. **Land**:
- **Cost**: $90,000
- **Accumulated Depreciation**: Not applicable (land does not depreciate)
- **Book Value**: $90,000

2. **Building**:
- **Cost**: $600,000
- **Accumulated Depreciation**: ($60,000)
- **Book Value**: $540,000

3. **Equipment**:
- **Cost**: $200,000
- **Accumulated Depreciation**: ($72,000)
- **Book Value**: $128,000

4. **Patent**:
- **Cost**: $80,000
- **Accumulated Depreciation**: ($20,000)
- **Book Value**: $60,000

### Key Terms:
- **Cost**: This is the initial amount paid to acquire the asset.
- **Accumulated Depreciation**: The total depreciation expense recorded for an asset up to a specific point in its useful life.
- **Book Value**: The net amount at which an asset is carried on the balance sheet. It is calculated as the cost of the asset minus its accumulated depreciation.

### Breakdown of Asset Valuation:
- **Land** does not depreciate and hence, its cost and book value remain the same at $90,000.
- **Building** originally cost $600,000, and has accumulated $60,000 in depreciation, resulting in a book value of $540,000.
- **Equipment** has incurred $72

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