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 $50.400 cash (estimated useful life, nine years). b. On January 1, purchased another business for $164,000 cash, including $7,000 for goodwill. The assets included accounts receivable with a fair value of $11,000 and property and equipment with a fair value of $146,000 (with a residual value of $15,330 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 $21,600. 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 $5,500 during the current year. e. On December 31 of the current year, sold Machine A for $7,100 cash. Original cost was $24,000; accumulated depreciation to December 31 of the prior year was $16,400 (on a straight-line basis with a $3,500 residual value and five-year useful life). Record the depreciation expense in transaction e(1) and the sale in transaction e(2). f. On December 31 of the current year, paid $6,600 for a complete reconditioning of Machine B acquired on January 1 of the prior year. Original cost, $35,200; accumulated depreciation to December 31 of the prior year was $2,400 (on a straight-line basis with a $8,800 residual value and 11-year useful life). 2. For each of these the assets involved in transactions (a) through (f), record the adjusting entry for depreciation or amortization expense at 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. Answer is complete but not entirely correct. No Transaction General Journal Debit Credit 1 a Amortization expense Patent 5,600 5,600 2 b | 3 4 C Depreciation expense Accumulated depreciation No journal entry required d 5 e 6 f 13,067 13,067 No journal entry required No journal entry required Depreciation expense 2,500 Accumulated depreciation 2,560x