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[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
[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 $32,000 cash (estimated useful life, eight years). b. On January, purchased the assets (not detailed) of another business for $151,000 cash, including $9,000 for goodwill. 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 was $30,600. The company uses straight-line depreciation. The lease will expire in ten years. (Amounts spent to enhance leased property are capitalized as intangible assets called Leasehold Improvements.) d. Total expenditures for ordinary repairs and maintenance were $5,900 during the current year. e. On December 31 of the current year, sold Machine A for $6,700 cash. Original cost was $22,000; accumulated depreciation (straight line) to December 31 of the prior year was $14,640 (on a straight-line basis with a $3,700 residual value and five-year useful life). You should record the effects of two separate transactions for this event. f. On December 31 of the current year, paid $6,500 for a complete reconditioning of Machine B acquired on January 1 of the prior year. Original cost, $54,700; accumulated depreciation to December 31 of the prior year was $3,400 (on a straight-line basis with a $7,100 residual value and 14-year useful life). Required: 1. For each of these transactions, indicate the accounts, amounts, and effects (+ for increase and - for decrease) on the accounting equation. Assets Liabilities + Stockholders' Equity Date Jan. 1 a. b. Jan. 1 C. Dec. 31 d. Current Year (3,660) e(1). Dec. 31 e(2). Dec. 31 f. Dec. 31 2. For each of these assets, compute depreciation and amortization to be recorded at the end of the year on December 31,of the current year. a. b c. Patent Goodwill Leasehold improvements Ordinary repairs and maintenance Machine A Machine B d. e. f
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