Record $22,000 purchase of patent for cash on January 1. Record $163,000 purchase of another business for cash, including goodwill for $11,000, accounts receivable with a fair value of $11,000 and property and equipment with a fair value of $141,000. Record $29,600 construction of a storage shed on a leased land. Record $5,800 expenditures for ordinary repairs during the current year. On December 31 of the current year, sold Machine A for Note : = journal entry has been entered P8-6 (Algo) Recording Journal Entries Related to Various Long-Lived Assets LO8-2, 8-3, 8-6 [The following information applies to the questions displayed below.] During the current year ending on December 31, BSP Company completed the following transactions: a. On January 1, purchased a patent for $22,000 cash (estimated useful life, five years). b. On January 1, purchased another business for $163,000 cash, including $11,000 for goodwill. The assets included accounts recelvable with a fair value of $11,000 and property and equipment with a fair value of $141,000 (with a residual value of $14,805 and estimated useful life of 10 years). The company assumed no liabilities. Goodwill has an indefinite life. c. On December 31, constructed a storage shed on land leased from D. Heald. The cost of the shed was $29,600. The company uses straight-line depreciation. The lease will expire in eight years. (Amounts spent to enhance leased property are capitalized as intangible assets called Leasehold Improvements.) d. Total expenditures for ordinary repairs were $5,800 during the current year: e. On December 31 of the current year, sold Machine A for $6,300 cash. Original cost was $24,000; accumylated depreciation to December 31 of the prior year was $15,680 (on a straight-ine basis with a $4,400 residust value and flve-yeat useful if ). Record the depreciation expense in transaction e(1) and the sale in transaction e(2). t On December 31 of the current year, paid $5,600 for a complete reconditioning of Machine 8 acquired on January 1 of the prior year, Original cost, $78,500; accumulated depreciation to December 31 of the prior year was $3,500 (on a straight-line basis with a $8,500 residual value and 20 -year useful life). P8-6 Part 2 2. For each of these the assets involved in transactions (o) through ( ), record the adjusting entry for dopreciation or amortization expense ot the end of the current year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Record $29,600 construction of a storage shed on a leased land. Record $5,800 expenditures for ordinary repairs during the current year. On December 31 of the current year, sold Machine A for $6,300 cash. Original cost was $24,000; accumulated depreciation to December 31 of the prior year was $15,680 (on a straight-line basis with a $4,400 residual value and five-year useful life). Record the sale. Record $5,600 paid for a complete reconditioning of Machine B acquired on January 1 of the prior year
