Analyze transactions to identify accounting principle or assumption violated, and prepare correct entries. (SO 4, 5) PAP-1A Scott and Quick are accountants for Century Computers. They disagree over the fol- lowing transactions that occurred during the calendar year 2011. 1. Scott suggests that equipment should be reported on the balance sheet at its liquidation value, which is $15,000 less than its cost. 2. Century bought a custom-made piece of equipment for $36,000. This equipment has a useful life of 6 years. Century depreciates equipment using the straight-line method. "Since the equipment is custom-made, it will have no resale value. Therefore, it shouldn't be depreciated but instead should be expensed immediately," argues Scott. "Besides, it provides for lower net income." 3. Depreciation for the year was $18,000. Since net income is expected to be lower this year, Scott suggests deferring depreciation to a year when there is more net income. 4. Land costing $60,000 was appraised at $90,000. Scott suggests the following journal entry. Land Gain on Appreciation of Land 30,000 30,000 5. Century purchased equipment for $35,000 at a going-out-of-business sale. The equipment was worth $45,000. Scott believes that the following entry should be made. Equipment Cash Gain 45,000 35,000 10,000 Quick disagrees with Scott on each of the above situations. Instructions For each transaction, indicate why Quick disagrees. Identify the accounting principle or assump- tion that Scott would be violating if his suggestions were used. Prepare the correct journal entry for each transaction, if any.