CP9-3 Analyzing and Recording Long-Lived Asset Transactions with Partial-Year Depreciation [LO 9-2, LO 9-3, LO 9-6]

[The following information applies to the questions displayed below.]

Palmer Cook Productions manages and operates two rock bands. The company entered into the following transactions during a recent year.

January 2	Purchased a tour bus for $94,000 by paying $33,000 cash and signing a $61,000 note due in two years.
January 8	The bus was painted with the logos of the two bands at a cost of $300, on account.
January 30	Wrote a check for the amount owed on account for the work completed on January 8.
February 1	Purchased new speakers and amplifiers and wrote a check for the full $31,500 cost.
February 8	Paid $200 cash to tune up the tour bus.
March 1	Paid $33,000 cash and signed a $255,000 five-year note to purchase a small office building and land. An appraisal indicated that the building and land contributed equally to the total price.
March 31	Paid $92,000 cash to acquire the goodwill and certain tangible assets of Kris Myth, Inc. The fair values of the tangible assets acquired were $22,000 for band equipment and $62,000 for recording equipment.

References

Section BreakCP9-3 Analyzing and Recording Long-Lived Asset Transactions with Partial-Year Depreciation [LO 9-2, LO 9-3, LO 9-6]

6.

value: 1.81 points

Required information

CP9-3 Part 1a

Required:

1-a.	Complete the table below, indicating the account, amount, and direction of the effect (+ for increase and ? for decrease) for the above transactions. (Enter any decreases to Assets, Liabilities, or Stockholders' Equity with a minus sign.)
	TIP: Goodwill is recorded as the excess of the purchase price over the fair value of individual assets.

References

Accounting EquationDifficulty: 3 HardLearning Objective: 09-06 Analyze the acquisition, use, and disposal of long-lived intangible assets.

CP9-3 Part 1aLearning Objective: 09-03 Apply various depreciation methods as economic benefits are used up over time.

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7.

value: 1.81 points

Required information

CP9-3 Part 1b to 3

1-b.	Prepare the journal entries for each of the above transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

2.

For the tangible and intangible assets acquired in the preceding transactions, determine the amount of depreciation and amortization that Palmer Cook Productions should report for the quarter ended March 31. For convenience, the equipment and vehicle are depreciated the same way, using the straight-line method with a useful life of five years and no residual value. The building is depreciated using the double-declining-balance method, with a 8-year useful life and residual value of $33,000. (Do not round intermediate calculations).

TIP: Calculate depreciation from the acquisition date to the end of the quarter.

3.	Prepare a journal entry to record the depreciation calculated in requirement 2. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)