a. Explanation Goodwill : The value of an intangible asset is determined by the factors like quality, management, capacity to generate income and reputation with the general public and other competitive firms is known as the goodwill for the firm. Amortization: When the costs of intangibles are allocated over a certain period in a systematic manner it is known as amortization of intangible assets. Research and Development Expenditure: Expenditures incurred for the purpose of research or generation of new technology, products or service is known as research and development expenditure Journal entry to record depreciation on vehicles: Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) 31 Dec, 2015 Depreciation expense- vehicles 2,083 Accumulated depreciation 2,083 (to record the depreciation on vehicles: for first half year) Table (1) Depreciation expense account is the expense account. Since, expense reduces the profit of the company. Hence, depreciation account is debited. Accumulated depreciation is liability account. Since, it reduces the value of the assets. Hence, accumulated depreciation account is credited. Journal entry to record the sale of vehicle: Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) 31 Dec, 2015 Cash 15,000 Accumulated depreciation 77,083 Loss on sale of vehicle 35,817 Vehicles 127,900 (to record sale of vehicles at a loss) Table (2) Cash is the asset for the company. Since, cash has been received due to which equity of the company increased. Hence, cash account is debited. Accumulated depreciation is the expense account. Since, expense reduces the profit of the company. Hence, accumulated depreciation account is debited. Loss on sale of vehicle is the loss account. Since, loss reduces the asset of the company. Hence, loss on sale of vehicle account is debited. Vehicles are the assets of the company. Since, vehicles have been sold due to which assets reduce. Hence, vehicles account is credited. Journal entry to record the depreciation: Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) 31 Dec, 2015 Depreciation-Machinery 10,625 Depreciation-equipment 16,000 Accumulated depreciation –Machinery 10,625 Accumulated depreciation –Equipment 16,000 (to record the amount of the depreciation) Table (3) Depreciation expense account is the expense account. Since, expense reduces the profit of the company. Hence, depreciation account is debited. Accumulated depreciation is liability account. Since, it reduces the value of the assets. Hence, accumulated depreciation account is credited. Journal entry to record the loss on machinery: Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) 31 Dec, 2015 Accumulated depreciation –Machinery 180,625 Loss on machinery 164,875 Machinery 345,500 (to record loss on machinery) Table (4) Accumulated depreciation is the expense account. Since, expense reduces the profit of the company. Hence, accumulated depreciation account is debited. Loss on sale of machinery is the loss account. Since, loss reduces the asset of the company. Hence, loss on sale of machinery account is debited. Machinery is the assets of the company. Since, Machinery has been sold due to which assets reduce. Hence, Machinery account is credited. Journal entry to record the Equipment destroyed due to fire: Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) 31 Dec, 2015 Accumulated depreciation –Equipment 180,625 Loss on Equipment 164,875 Equipment 345,500 (to record loss on machinery) Table (5) Accumulated depreciation is the expense account. Since, expense reduces the profit of the company. Hence, accumulated depreciation account is debited. Loss on sale of Equipment is the loss account. Since, loss reduces the asset of the company. Hence, loss on sale of Equipment account is debited. Equipment is the assets of the company. Since, Equipment has been sold due to which assets reduce. Hence, Equipment account is credited. Journal entry to record the replace equipment and machinery: Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) 31 Dec, 2015 Equipment 625,000 Machinery 420,000 Cash 1,045,000 (To record the cash paid to purchase the equipment and machinery) Table (6) Equipment and machinery is the asset of the company. Since, the machinery has been purchased by the company due to which asset of the company increased. Hence, equipment and machinery account is debited. Cash is the asset account. Since, cash has been paid due to which equity of the reduced. Hence, cash account is credited. Journal entry to record the depreciation building: Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) 31 Dec, 2015 Depreciation expense- building 525,000 Accumulated depreciation 525,000 (To record the depreciation charged on asset) Table (7) Depreciation expense account is the expense account. Since, expense reduces the profit of the company. Hence, depreciation account is debited. Accumulated depreciation is liability account. Since, it reduces the value of the assets. Hence, accumulated depreciation account is credited. Journal entry to record the depreciation equipment: Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) 31 Dec, 2015 Depreciation expense- equipment 83,333 Accumulated depreciation 83,333 (to record the depreciation charged on asset) Table (8) Depreciation expense account is the expense account. Since, expense reduces the profit of the company. Hence, depreciation account is debited. Accumulated depreciation is liability account. Since, it reduces the value of the assets. Hence, accumulated depreciation account is credited. Journal entry to record the depreciation Machinery: Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) 31 Dec, 2015 Depreciation expense- Machinery 34,542 Accumulated depreciation 34,542 (to record the depreciation charged on asset) Table (9) Depreciation expense account is the expense account. Since, expense reduces the profit of the company. Hence, depreciation account is debited. Accumulated depreciation is liability account. Since, it reduces the value of the assets. Hence, accumulated depreciation account is credited. Journal entry to record the depreciation land improvement: Date Account title and explanation Post. Ref. Debit ($) Credit ($) 31 Dec, 2015 Depreciation expense- land improvement 21,800 Accumulated depreciation 21,800 (to record the depreciation charged on asset) Table (10) Depreciation expense account is the expense account. Since, expense reduces the profit of the company. Hence, depreciation account is debited. Accumulated depreciation is liability account. Since, it reduces the value of the assets. Hence, accumulated depreciation account is credited. Working Notes: Calculation of the value of the depreciation: Depreciation = Cost of assets − Scrap value Life of assets × 1 Months 12 Months = $ 127 , 900 − $ 2 , 900 5years × 1 Months 12 Months = $ 125 , 000 5 Years × 1 Months 12 Months = $ 2 , 083 b. To determine The net book value of assets for R.

Intermediate Accounting - Myaccountinglab - Pearson Etext Access Card Student Value Edition

1st Edition

ISBN: 9780134047430

Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

Publisher: PEARSON

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Chapter 11, Problem 11.6P

To determine

To prepare: The journal entry and record the depreciation expenses.

To determine

The net book value of assets for R.

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Chapter 11, Problem 11.5P

Chapter 11, Problem 11.7P

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Chapter 11 Solutions

Intermediate Accounting - Myaccountinglab - Pearson Etext Access Card Student Value Edition

Ch. 11 - Stephen J. Cosgrove is the Former Vice President....Ch. 11 - Prob. 11.2Q Ch. 11 - Prob. 11.3Q Ch. 11 - Prob. 11.4Q Ch. 11 - Will the expense/capitalization choice impact...Ch. 11 - Prob. 11.6Q Ch. 11 - Prob. 11.7Q Ch. 11 - For a long-lived operating asset acquired by...Ch. 11 - Prob. 11.9Q Ch. 11 - Prob. 11.10Q

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