Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question #5 1) Caleb Inc. owns equipment, which was purchased on January 1, 2013, for $90,000 by paying $20,000 down payment and issuing a note

Question #5

1) Caleb Inc. owns equipment, which was purchased on January 1, 2013, for $90,000 by paying $20,000 down payment and issuing a note payable for the balance. The equipment had an estimated useful life of 10 years, and an estimated residual value of $10,000. The company uses the straight-line method of amortization and has a December 31 year-end. On April 30, 2015, the machine was sold for $55,000.

Required:

A) Prepare the journal entry to record the acquisition of the machine.

B) Assuming that the amortization was correctly calculated and recorded in 2013 and 2014, prepare the journal entries to update the amortization and record the sale of the machine on April 30, 2015.

C) If the company had used the double-declining-balance method to amortize the cost of the machine:

1. What amount of amortization would have been recorded in 2013 and 2014?

2. What journal entries would have been required to update the amortization and record the sale of the equipment on April 30, 2015.

2) St Jacques Company brought a piece of land with a building on it for a total of $4,400,000. They hired a company to estimate the fair values of the land and building. The estimate was: Land $1,200,000, Building $3,600,000.

Required: Calculate the amount to be allocated to the Land and the Building account.

3) Minnie's Model Co. purchased a piece of equipment which cost $68,900, has a $4,900 residual value, and an 8-year useful life on January 1, 2015.

Required: Calculate the amortization expense for 2015 under: a. Straight-line b. Declining balance (rate 20%) c. Double-declining-balance

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Humor And Other Oxymorons

Authors: Mr Mike Jacka

1st Edition

0991280903, 978-0991280902

More Books

Students also viewed these Accounting questions

Question

Differentiate the function. f (t) = 2et

Answered: 1 week ago

Question

Create a holiday on sep.27th

Answered: 1 week ago