! Required information [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 $48,000 cash (estimated useful life, ten years). b. On January 1, purchased another business for $176,000 cash, including $12,000 for goodwill. The assets included accounts receivable with a fair value of $15,000 and property and equipment with a fair value of $149,000 (with a residual value of $15,645 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 six years. (Amounts spent to enhance leased property are capitalized as intangible assets called Leasehold Improvements.) d. Total expenditures for ordinary repairs were $4,900 during the current year. e. On December 31 of the current year, sold Machine A for $7,000 cash. Original cost was $19,000; accumulated depreciation to December 31 of the prior year was $11,920 (on a straight-line basis with a $4,100 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 $5,500 for a complete reconditioning of Machine B acquired on January 1 of the prior year. Original cost, $74,700; accumulated depreciation to December 31 of the prior year was $3,300 (on a straight-line basis with a $8,700 residual value and 20-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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Rahul 

!
Required information
[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 $48,000 cash (estimated useful life, ten years).
b. On January 1, purchased another business for $176,000 cash, including $12,000 for goodwill. The assets included
accounts receivable with a fair value of $15,000 and property and equipment with a fair value of $149,000 (with a
residual value of $15,645 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 six years. (Amounts spent to enhance leased property
are capitalized as intangible assets called Leasehold Improvements.)
d. Total expenditures for ordinary repairs were $4,900 during the current year.
e. On December 31 of the current year, sold Machine A for $7,000 cash. Original cost was $19,000; accumulated
depreciation to December 31 of the prior year was $11,920 (on a straight-line basis with a $4,100 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 $5,500 for a complete reconditioning of Machine B acquired on January 1 of
the prior year. Original cost, $74,700; accumulated depreciation to December 31 of the prior year was $3,300 (on a
straight-line basis with a $8,700 residual value and 20-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.
Transcribed Image Text:! Required information [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 $48,000 cash (estimated useful life, ten years). b. On January 1, purchased another business for $176,000 cash, including $12,000 for goodwill. The assets included accounts receivable with a fair value of $15,000 and property and equipment with a fair value of $149,000 (with a residual value of $15,645 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 six years. (Amounts spent to enhance leased property are capitalized as intangible assets called Leasehold Improvements.) d. Total expenditures for ordinary repairs were $4,900 during the current year. e. On December 31 of the current year, sold Machine A for $7,000 cash. Original cost was $19,000; accumulated depreciation to December 31 of the prior year was $11,920 (on a straight-line basis with a $4,100 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 $5,500 for a complete reconditioning of Machine B acquired on January 1 of the prior year. Original cost, $74,700; accumulated depreciation to December 31 of the prior year was $3,300 (on a straight-line basis with a $8,700 residual value and 20-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.
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
steps

Unlock instant AI solutions

Tap the button
to generate a solution

Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education