On December 31, 2020, Faital Company acquired a computer from Plato Corporation by issuing a $600,000 zero-interest-bearing
Question:
On December 31, 2020, Faital Company acquired a computer from Plato Corporation by issuing a $600,000 zero-interest-bearing note, payable in full on December 31, 2024. Faital Company’s credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $70,000 salvage value.
Instructions
(Round answers to the nearest cent.)
a. Prepare the journal entry for the purchase on December 31, 2020.
b. Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use eff ective-interest method) on December 31, 2021.
c. Prepare any necessary adjusting entries relative to depreciation and amortization on December 31, 2022.
Salvage ValueSalvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
a b 303 adjustment due to rounding c Dece...View the full answer
Intermediate Accounting
ISBN: 978-1119503668
17th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel
