3) The theater equipment was acquired on February 1, 20x1 for a cash payment of: The life of the theater equipment is estimated to be (number of years): The residual value (as a percentage of original cost) is estimated at: $ 18,000 6 20% 1) On May 1, 20x2, the HCC purchased a vacant building which had been used for a short period of time as a dance studio and small performance space. $ 480,000 Total cost: Cost allocation: percentage Land 12% Building 65% Heating/Air conditioning equipment 18% Old theater equipment 5% $ 38,400 $ 441,600 Terms of purchase: A cash down payment was paid on May 1, 20x2: A 30-year, 5% mortgage was arranged for the remaining amount: DEPRECIATION was determined as follows: Estimated life (in number of years) (Note: Depreciation will begin as of July 1, 20x2 - after renovation.) The residual value (as a percentage of original cost) is estimated at: 25 BUILDING: 25% Estimated life (in number of years - Depreciation to begin 5/1/x2) 8 HEATING AND The residual value (as a percentage of original cost) is estimated at: 0% A/C EQUIPMENT: The old theater equipment is going to be sold and replaced and is, therefore, OLD THEATER not being depreciated EQUIPMENT: 4) The existing (old) theater equipment (e.g., amount purchased on February 1, 20x1 plus amount acquired on May 1, 20x2 with purchase of vacant building) was sold on July 1, 20x2. Terms of sale: A note receivable was accepted in exchange for the old theater equipment (referred to as "Note $32,000 33 Maturity value of note: Receivable "2".) Term of note (in number of years): 3% Stated annual interest rate: 6% Annual interest rate considered appropriate in circumstances: 5) New theater equipment was purchased on July 1, 20x2. Terms of purchase: An initial cash payment plus a non-interest bearing note payable (referred to as "Note Payable "B") were issued in exchange for the new theater equipment. $ 15,000 Initial cash payment: 140,000 Maturity value of non-interest bearing note: Term of note (in number of years): Annual interest rate considered appropriate in circumstances: 8% July 1, 20x2: Record sale of theater equipment. (Hint: update depreciation on theater equipment purchased on February 1, 20x1 before recording sale.) (Note receivable "2" for sale.) July 1, 20x2: Record purchase of theater equipment (Note Payable "B"): 155,000 Equipment Theate 3) The theater equipment was acquired on February 1, 20x1 for a cash payment of: The life of the theater equipment is estimated to be (number of years): The residual value (as a percentage of original cost) is estimated at: $ 18,000 6 20% 1) On May 1, 20x2, the HCC purchased a vacant building which had been used for a short period of time as a dance studio and small performance space. $ 480,000 Total cost: Cost allocation: percentage Land 12% Building 65% Heating/Air conditioning equipment 18% Old theater equipment 5% $ 38,400 $ 441,600 Terms of purchase: A cash down payment was paid on May 1, 20x2: A 30-year, 5% mortgage was arranged for the remaining amount: DEPRECIATION was determined as follows: Estimated life (in number of years) (Note: Depreciation will begin as of July 1, 20x2 - after renovation.) The residual value (as a percentage of original cost) is estimated at: 25 BUILDING: 25% Estimated life (in number of years - Depreciation to begin 5/1/x2) 8 HEATING AND The residual value (as a percentage of original cost) is estimated at: 0% A/C EQUIPMENT: The old theater equipment is going to be sold and replaced and is, therefore, OLD THEATER not being depreciated EQUIPMENT: 4) The existing (old) theater equipment (e.g., amount purchased on February 1, 20x1 plus amount acquired on May 1, 20x2 with purchase of vacant building) was sold on July 1, 20x2. Terms of sale: A note receivable was accepted in exchange for the old theater equipment (referred to as "Note $32,000 33 Maturity value of note: Receivable "2".) Term of note (in number of years): 3% Stated annual interest rate: 6% Annual interest rate considered appropriate in circumstances: 5) New theater equipment was purchased on July 1, 20x2. Terms of purchase: An initial cash payment plus a non-interest bearing note payable (referred to as "Note Payable "B") were issued in exchange for the new theater equipment. $ 15,000 Initial cash payment: 140,000 Maturity value of non-interest bearing note: Term of note (in number of years): Annual interest rate considered appropriate in circumstances: 8% July 1, 20x2: Record sale of theater equipment. (Hint: update depreciation on theater equipment purchased on February 1, 20x1 before recording sale.) (Note receivable "2" for sale.) July 1, 20x2: Record purchase of theater equipment (Note Payable "B"): 155,000 Equipment Theate