FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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QS 8-12 (Algo) Disposal of assets LO P2
Garcia Company owns equipment that cost $84,400, with
Record the sale of the equipment under the following three separate cases assuming Garcia sells the equipment for (1) $52,700 cash, (2) $39,800 cash, and (3) $34,700 cash.
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- QUESTION 4 Cullumber Company owns delivery equipment that cost $53,800 and has accumulated depreciation of $27,300 as of July 30, 2020. On that date, Cullumber disposes of this equipment. For parts b- d below, enter D for debit or C for credit in the first box and the amount in the second box. a. What is the net book value of the equipment on July 30, 2020? b. Assume Cullumber scraps the equipment as having no value on July 30. What is the gain or loss, if any, that Cullumber should recognize? c. Assume Cullumber sells the equipment for $37,200 cash on July 30. What is the gain or loss, if any, that Cullumber should recognize? d. Assume Cullumber sells the equipment for $18,000 cash on July 30. What is the gain or loss, if any, that Cullumber should recognize?arrow_forwardExercise 8-4A (Algo) Determining the cost of an asset LO 8-1 Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $120,090. The seller agreed to allow a 4.75 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Transportation cost amounted to $2,500. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $1,100. The loader operator is paid an annual salary of $27,380. The cost of the company's theft insurance policy increased by $1,560 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $5,100. Required: Determine the amount to be capitalized in an asset account for the purchase of the front-end loader. Note: Round your answers to the nearest whole dollar. Amounts to be deducted should be indicated with minus sign. Costs that are to be capitalized: List price Total costsarrow_forwardQ#5 During the current year, Crown Developers disposed of plant assets in the following transactions: Feb 10 Office equipment costing Rs. 14,000 was given to a scrap dealer. No proceeds were received for the scrap dealer. At the date of disposal, accumulated depreciation on the office equipment amounted to Rs. 11,900. Apr. 1 Crown sold land and a building to Villa Associates for Rs. 630,000 receiving Rs. 200,000 in cash and a 5-year, 10% note receivable for Rs. 430,000. Crown’s accounting records showed the following amounts: Land Rs. 120,000 Building Rs. 350,000 Accumulated Depreciation: Building (as of April 1) Rs. 115,000 Aug 15 Crown trade-in an old truck for a new one the old truck had cost Rs. 11,000 and accumulated depreciation amounted to Rs. 7,000. The list price of the new truck was Rs. 17,000; Crown received a…arrow_forward
- Brief Exercise 8-5 (Algo) Effect of the disposal of plant assets on the financial statements LO 8-5 Mix & Match Company sold office equipment with a cost of $48,600 and accumulated depreciation of $33,000 for $28,000 cash. Required: a. What is the amount of gain or loss on the disposal? b. How would the sale affect net income (increase, decrease, no effect)? c. How would the sale affect the amount of total assets shown on the balance sheet (increase, decrease, no effect)? d. How would the event affect the statement of cash flows (inflow, outflow, no effect)? a. b. Effect of sale on net income c. Effect of sale on total assets d. Effect of sale on statement of cash flowsarrow_forwardces Mc Graw Hill Problem 7-3B (Algo) Calculate and record goodwill (LO7-2) Northern Equipment Corporation purchased all the outstanding common stock of Pioneer Equipment Rental for $5,590,000 in cash. The book values and fair values of Pioneer's assets and liabilities were as follows: Accounts Receivable $ 740,000 Book Value Fair Value $ 640,000 Buildings 4,090,000 4,790,000 Equipment 100,000 190,000 Accounts Payable (760,000) (760,000) $ $ Net assets 4,170,000 4,860,000 Required: 1. Calculate the amount Northern Equipment should report for goodwill. 2. Record Northern Equipment's acquisition of Pioneer Equipment Rental. Complete this question by entering your answers in the tabs below. Required Required 1 2 Record Northern Equipment's acquisition of Pioneer Equipment Rental. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet < 1 Record the acquisition of Pioneer Equipment…arrow_forwardMini-Exercise 6-7 (Algo) Goodwill LO 6-9 Backstreets Company recently acquired all of Jungleland Incorporated's net assets in a business acquisition. The cash purchase price was $9.1 million. Jungleland's assets and liabilities had the following appraised values immediately prior to the acquisition: land, $2.5 million; buildings, $4.2 million; inventory, $3.0 million; long-term notes payable, for which Backstreets Company assumes payment responsibilities, $2.3 million. Required: How much goodwill will result from this transaction? Note: Enter your answer in whole dollars. Goodwillarrow_forward
- Problem 7-5A (Algo) Determine depreciation under three methods (LO7-4) [The following information applies to the questions displayed below.] 1 2 3 4 5 6 University Car Wash purchased new soap dispensing equipment that cost $231,000 including installation. The company estimates that the equipment will have a residual value of $25,500. University Car Wash also estimates it will use the machine for six years or about 12,500 total hours. Actual use per year was as follows: Year Year 1 2 3 4 SSVI 5 6 Problem 7-5A (Algo) Part 2 2. Prepare a depreciation schedule for six years using the double-declining-balance method. (Do not round your intermediate calculations.) Hours Used 2,900 1,800 1,900 2,100 1,900 1,900 Depreciation Expense UNIVERSITY CAR WASH Depreciation Schedule-Double-Declining-Balance End of Year Amounts Accumulated Depreciation Book Value Helparrow_forwardTt1.arrow_forwardBrief Exercise 7-12 Calculate amortization expense (LO7-5) In early January, Burger Mania acquired 100% of the common stock of the Crispy Taco restaurant chain. The purchase price allocation included the following items: $4 million, patent; $5 million, trademark considered to have an indefinite useful life; and $6 million, goodwill. Burger Mania's policy is to amortize intangible assets with finite useful lives using the straight-line method, no residual value, and a five-year service life. What is the total amount of amortization expense that would appear in Burger Mania's income statement for the first year ended December 31 related to these items? (Enter your answer in dollars, not in millions (i.e. 5 should be entered as 5,000,000).) Amortization expensearrow_forward
- K Exercise 8-12A (Algo) Effect of the disposal of plant assets on the financial statements LO 8-5 Un Company sold office equipment with a cost of $37,110 and accumulated depreciation of $32,541 for $6,720. Required a. What is the book value of the asset at the time of sale? b. What is the amount of gain or loss on the disposal? c. How would the sale affect net income (increase, decrease, no effect) and by how much? d. How would the sale affect the amount of total assets shown on the balance sheet (increase, decrease, no effect) and by how much? e. How would the event affect the statement of cash flows (increase, decrease, no effect) and in what section? a. Book value b. Gain (loss) on sale c. Net income would d. Total assets would e. Effect on statement of cash flows e. Section Prey 7 of 11 Next >arrow_forwardPARRISH 8 8-1 ACQUISITIONS OF ASSETS For the following asset plese identify the costs. For any costs that are not included in the asset cost, specify how they would be recorded. Invoice price $90,000 (2/10, n/30) Sales Tax 3,400 Freight to ship to Company 6,000 Transport to factory 1.900 Repair of chip in machine from damage in loading 500 Training of operators 3,600 Lunch for truck drivers in transit 25arrow_forwardLO 9 Assets Cash + Patent + 94,000 ΝΑ + + Exercise 8-20A Computing and recording the amortization of intangibles Texas Manufacturing paid cash to purchase the assets of an existing company. Among the assets purchased were the following items: Goodwill ΝΑ Texas's financial condition just prior to the purchase of these assets is shown in the following statements model: = Patent with 5 remaining years of legal life Goodwill Liab. ΝΑ Equity Rev. + 94,000 ΝΑ Exp. $36,000 40,000 ΝΑ = Net Inc. = ΝΑ Cash Flow ΝΑ Required a. Compute the annual amortization expense for these items if applicable. b. Record the purchase of the intangible assets and the related amortization expense for year 1 in a horizontal statements model like the preceding one. c. Prepare the journal entries to record the purchase of the intangible assets and the related amortization for year 1.arrow_forward
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