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Redlands, Inc. made the following investments on January 2, 2012, its first year of business: Item Cost Residual Value Expected Life Cost Allocation Warehouse $120
Redlands, Inc. made the following investments on January 2, 2012, its first year of business:
Item | Cost | Residual Value | Expected Life | Cost Allocation |
Warehouse | $120 | $20 | 25 years | Straight-line |
Machine | 60 | 10 | 10 years | Double-declining |
Photocopier | 75 | 5 | 7,000 copies | Productive output |
Patent | 20 | 0 | 10 years | Straight-line |
Trademark | 10 | 0 | Indefinite | Not applicable |
Required (A):
- Record the adjusting journal entries on December 31, 2012. Redlands made 2,000 copies in 2012.
- Present the depreciation and amortization expenses on the 2012 income statements.
- Report the book values of the long-term assets on the December 31, 2012 balance sheet.
On January 2, 2013, Redlands,
- Sold its warehouse for $111.
- Sold the machine for $52.
- Estimated the patent would only have value for a total of 7 years (expires on 12/31/18).
Required (B):
- Compute the gain or loss on the sale of the warehouse.
- Compute the gain or loss on the sale of the machine.
- Present the depreciation and amortization expenses for the photocopier and patent on the 2013 income statements. Redlands made 3,000 copies in 201
- Report the book values of the photocopier, patent, and trademark on the December 31, 2013 balance sheet.
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