4. RECOGNITION Determinc events to be rocogrited. E.10 (L.03,5) C Video The following is a list of independent events: 1. A company pays $10,000 cash to purchase equipment at a banicruptry sale. The equipment's fair value is $15,000 2. A Canadinn company purchsses equipencnt from a company in the United States and pays USS5,000 cash. It cost the company 55,200 Canadian to purchase the U.S, dollars from its bank. 3. A company provides $4,000 of services to a customer on account. 4. A company hires a new chief executive officer, who will bring significant economic benefit to the company. The company agrees to pay the new executive officer $500,000 per year. 5. A company signs a contract to provide $10,000 of servioes to a customer. The cuatomer pays the company 54,000 cash at the time the contract is rigned. The performance obligation required by the company has not been completed. Instructions a. Should the transaction be recorded in the accounting records? Explain why or why not. b. If the transaction should be recorded, indicate the amount. Explain. Answers: a. and b. I. 2. . 4. 5. CPA \#I(W23) Page 4 of 10 7. EFFECTS ON OWNERS EQUITY Determine effects of transactions on owner's equity. BE1.14 (LO 4, 5) AP Classify each of the following as owner's investments (I), drawings (D), revenue (R), expenses (E), or as having no effect on owner's equity (NE): a. (E) Advertising expense b. (R) Commission fees earned c. Cash received from the company's owner d. Amounts paid to employees e. Services performed on account f. Utilities incurred g. Cash distributed to company owner