LO 11.1Fombell, Incorporated has the following assets in its trial balance:
What is the total balance of its Property, Plant, and Equipment?
LO 11.2Jada Company had the following transactions during the year:
- Purchased a machine for $500,000 using a long-term note to finance it
- Paid $500 for ordinary repair
- Purchased a patent for $45,000 cash
- Paid $200,000 cash for addition to an existing building
- Paid $60,000 for monthly salaries
- Paid $250 for routine maintenance on equipment
- Paid $10,000 for extraordinary repairs
If all transactions were recorded properly, what amount did Jada capitalize for the year, and what amount did Jada expense for the year?
LO 11.3Montello Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for eight years. Montello uses the straight-line depreciation method. Calculate the annual depreciation expense.
LO 11.3Montello Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for 120,000 miles. Montello uses the units-of-production depreciation method and in year one it expects to use the truck for 23,000 miles. Calculate the annual depreciation expense.
LO 11.3Steele Corp. purchases equipment for $25,000. Regarding the purchase, Steele recorded the following transactions:
- Paid shipping of $1,000
- Paid installation fees of $2,000
- Pays annual maintenance cost of $200
- Received a 5% discount on $25,000 sales price
Determine the acquisition cost of the equipment.
LO 11.3Calico Inc. purchased a patent on a new drug. The patent cost $21,000. The patent has a life of twenty years, but Calico only expects to be able to sell the drug for fifteen years. Calculate the amortization expense and record the journal for the first-year expense.
LO 11.3Alfredo Company purchased a new 3-D printer for $900,000. Although this printer is expected to last for ten years, Alfredo knows the technology will become old quickly, and so they plan to replace this printer in three years. At that point, Alfredo believes it will be able to sell the printer for $15,000. Calculate yearly depreciation using the double-declining-balance method.
LO 11.3Using the information from Exercise 11.7, calculate depreciation using the straight-line method.
LO 11.3Santa Rosa recently purchased a new boat to help ship product overseas. The following information is related to that purchase:
- Purchase price $4,500,000
- Cost to bring boat to production facility $25,000
- Yearly insurance cost $25,000
- Annual maintenance cost of $30,000
- Received 8% discount on sales price
Determine the acquisition cost of the boat, and record the journal entry needed.
LO 11.3Warriors Productions recently purchased a copyright. Although the copyright is expected to last a minimum of twenty-five years, the chief executive officer of the company believes this B-list movie will only be useful for the next fifteen years. Calculate the amortization expense and record the journal for the first year’s expense. The total cost of the copyright was $15,000.
LO 11.4The following intangible assets were purchased by Goldstein Corporation:
- A patent with a remaining legal life of twelve years is bought, and Goldstein expects to be able to use it for seven years.
- A copyright with a remaining life of thirty years is purchased, and Goldstein expects to be able to use it for ten years.
For each of these situations, determine the useful life over which Goldstein will amortize the intangible assets.
LO 11.5Sand River Sales has a fork truck used in its warehouse operations. The truck had an original useful life of five years. However, after depreciating the asset for three years, the company makes a major repair that extends the life by four years. What is the remaining useful life after the major repair?