Brown Company paid cash to purchase the assets of Coffee Company on January 1, 2019. Information...
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Brown Company paid cash to purchase the assets of Coffee Company on January 1, 2019. Information is as follows: Total cash paid Assets acquired: Land Building Machinery $3.500.000 se00,000 5500,000 5500,000 5500,000 Patents The building is depreciated using the double-dedining balance method. Other information is: Salvage value S50,000 Estimated useful life in years The machinery is depreciated using the units-of-production method. Other information is: Salvage value, percentage of cost Estimated total production output in Actual production in units was as 10% 200,000 40,000 60,000 20,000 2019 2020 2021 The patents are amortized on a straight-line basis. They have no salvage valu 30 Estimated useful life of patents in On December 31, 2020, the value of th patents was estimated to be the $100,000 Where applicable, the company uses the % year rule to calculate depreciation and amortization expense in the years of acquisition and disposal. Its fiscal year-end is December 31. The machinery was traded on December 2, 2021 for new machinery. Other information is: S240,000 $288,000 $403,200 20 $8.064 Fair value of old machinery Trade-in allowance List price for new machinery Estimated useful life of new machinery in Estimated salvage value of new The new machinery is depreciated using the straight-line method and On August 14, 2023, an addition was made. This amount was material. Other relevant information is as follows: Amount of addition, paid in cash Number of years of useful life from 2023 (original machinery and addition): Salvage value, percentage of addition S100,000 30 10% Required: Prepare journal entries to record: 1 The purchase of the assets of Coffee. 2 Depreciation and amortization expense on the purchased assets for 2019. 3 The decine (if any) in value of the patents at December 31 4 The trade-in of the old machinery and purchase of the new 5 Depreciation on the new machinery for 2021. e Cost of the addition to the machinery on August 14, 2023. 7 Depreciation on the new machinery for 2023. Brown Company paid cash to purchase the assets of Coffee Company on January 1, 2019. Information is as follows: Total cash paid Assets acquired: Land Building Machinery $3.500.000 se00,000 5500,000 5500,000 5500,000 Patents The building is depreciated using the double-dedining balance method. Other information is: Salvage value S50,000 Estimated useful life in years The machinery is depreciated using the units-of-production method. Other information is: Salvage value, percentage of cost Estimated total production output in Actual production in units was as 10% 200,000 40,000 60,000 20,000 2019 2020 2021 The patents are amortized on a straight-line basis. They have no salvage valu 30 Estimated useful life of patents in On December 31, 2020, the value of th patents was estimated to be the $100,000 Where applicable, the company uses the % year rule to calculate depreciation and amortization expense in the years of acquisition and disposal. Its fiscal year-end is December 31. The machinery was traded on December 2, 2021 for new machinery. Other information is: S240,000 $288,000 $403,200 20 $8.064 Fair value of old machinery Trade-in allowance List price for new machinery Estimated useful life of new machinery in Estimated salvage value of new The new machinery is depreciated using the straight-line method and On August 14, 2023, an addition was made. This amount was material. Other relevant information is as follows: Amount of addition, paid in cash Number of years of useful life from 2023 (original machinery and addition): Salvage value, percentage of addition S100,000 30 10% Required: Prepare journal entries to record: 1 The purchase of the assets of Coffee. 2 Depreciation and amortization expense on the purchased assets for 2019. 3 The decine (if any) in value of the patents at December 31 4 The trade-in of the old machinery and purchase of the new 5 Depreciation on the new machinery for 2021. e Cost of the addition to the machinery on August 14, 2023. 7 Depreciation on the new machinery for 2023.
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Answer Journal entries has been done below and all the calculations are given in working notes after journal entries Also single account for Depreciat... View the full answer
Related Book For
Survey of Accounting
ISBN: 978-0078110856
3rd Edition
Authors: Thomas P. Edmonds, Frances M. McNair, Philip R. Olds, Bor-Yi
Posted Date:
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