Part 5 A.

Simpson Mining purchased new equipment for 365,000, terms f.o.b. destination. Other costs connected with the purchase were as follows: State sales tax 29,200 Freight costs 5,600 Insurance while in transit 800 Insurance after equipment placed in service 1,200 Installation costs 2,000 Insurance for the first year of operations 2,400 Testing 700 Calculate the capitalized cost of the equipment.

B. On August 15, 2016, Drump Industries acquired all of the outstanding common stock of Flinton Inc. paying 7,400,000 cash. The book values and fair values of Drumps assets and liabilities are listed below: Book Value Fair Value Accounts receivable 1,080,000 975,000 Inventories 1,620,000 2,400,000 Property, plant, and equipment 5,400,000 6,975,000 Accounts payable 1,800,000 1,800,000 Bonds payable 2,700,000 2,475,000 Prepare the journal entry to record the acquisition by Drump.

C. Sherlock Company purchased assets of Holmes Ltd. at auction for $1,300,000. An independent appraisal of the fair value of the assets acquired is listed below: Land 214,500 Building 357,500 Equipment 572,000 Inventories 286,000 Prepare the journal entry to record the purchase of the assets.

D. Sawyer Enterprises purchased equipment for $72,000 on January 1, 2016. The equipment is expected to have a five-year life and a residual value of $6,000. Using the double-declining balance method: 1. Calculate depreciation for 2016 2. Calculate book value on December 31, 2017

E. On September 30, 2016, Bricker Enterprises purchased a machine for $200,000. The estimated service life is 10 years with a $20,000 residual value. Bricker records partial-year depreciation based on the number of months in service. Calculate depreciation for 2016

F. On March 31, 2016, M. Blackstone purchased the right to remove gravel from an old rock quarry. The gravel is to be sold as roadbed for highway construction. The cost of the quarry rights was $164,000, with estimated salable rock of 20,000 tons. During 2016, Blackstone loaded and sold 4,000 tons of rock and estimated that 16,000 tons remained at December 31, 2016. At January 1, 2017, Blackstone estimated that 20,000 tons still remained. During 2017, Blackstone loaded and sold 8,000 tons. Calculate Blackstones depletion for 2016.