Author: Anonymous

Maroon Corp. purchased factory equipment that was installed and put into service January 1, 2020, at a total cost of $164,000. Salvage value was estimated at $12,000. The equipment is being depreciated over five years using the double-declining balance method. For the year 2021, Maroon should record depreciation expense on this equipment of

Dawg Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange. The exchange is not expected to cause a material change in the future cash flows for either entity. If a gain on the disposal of the old asset is indicated, the gain will

EXTRA CREDIT: 4.6 points Presented below is information related to equipment owned by Stark Company at December 31, 2020. Cost $12,500,000 Accumulated depreciation to date $  1,340,000 Expected future net cash flows $  8,700,000 Fair value $  5,740,000 Assume that Stark will continue to use this asset in the future. As of December 31, 2020, the equipment has a remaining useful life of 4 years. Fill in the missing amounts and choose the correct option. For Stark company, the recoverability test compares $[1] to $[2]. As a result, the asset [3] the recoverability test, because [4] is/are less than [5], so a [6] on impairment is recorded in 2020. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.) [7] [8]       [9] [10]   Prepare the journal entry to record depreciation expense for 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.) [11] [12]       [13] [14]   The fair value of the equipment at December 31, 2021 is $5,540,000. Prepare the journal entry (if any) necessary to record this increase in fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.) [15] [16]       [17] [18]

Companies frequently use the composite approach when the assets are similar in nature and have approximately the same useful lives.

The following information relates to a patent owned by Scott Company: Cost  $      2,874,000 Carrying amount  $      1,532,000 Expected future net cash flow  $      1,496,000 Fair value  $      1,045,000 Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2019, assuming Scott will continue to use the asset in the future. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Round to the nearest dollar. Do NOT use a dollar sign in your answer.) Account Titles and Explanation   DR ($) CR ($) [DrT]      [DR]       [CrT]       [CR]   Using the same assumption as part (a) above, prepare the journal entry to record amortization expense for 2020 assuming the asset has a remaining useful life of 4 years at the beginning of 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Round to the nearest dollar. Do NOT use a dollar sign in your answer.) Account Titles and Explanation   DR ($) CR ($) [DrTb]         [DRb]       [CrTb]        [CRb]   Using the same assumption as part (a) above, prepare the journal entry (if any) at December 31, 2020, assuming the fair value of the asset has increased to $1,248,000. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Round to the nearest dollar. Do NOT use a dollar sign in your answer.) Account Titles and Explanation   DR ($) CR ($) [DrTc]          [DRc]       [CrTc]       [CRc]   Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2019, assuming Pharoah ceased using the patent at the end of 2019 and intends to dispose of the patent in the coming year. Pharoah expects to incur a $11,600 cost of disposal. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Round to the nearest dollar. Do NOT use a dollar sign in your answer.) Account Titles and Explanation   DR ($) CR ($) [DrTd]          [DRd]       [CrTd]        [CRd]

What interest rate (the nearest percent) must Lee earn on a $639,000 investment today so that he will have $1,148,000 after 12 years?   

If the month-end bank statement shows a balance of $156,000, outstanding checks are $54,000, a deposit of $15,000 was in transit at month end, and a check for $2,000 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

Dak uses the LIFO method to cost inventory. What amount should Dak report as inventory on January 31 under each of the following methods of recording inventory? Units Unit cost Total cost Units on hand Balance on 1/1 2,000 $1 2,000 2,000 Purchased on 1/8 1,200   3 3,600 3,200 Sold on 1/23 1,800 1,400 Purchased on 1/28    800   5 4,000 2,200 Answer format: [Perpetual      Periodic]

The cost of successfully defending a patent suit should be

Magnolia Co. had a sheet metal cutter that cost $150,000 on January 5, 2016. This old cutter had an estimated life of twelve years and a salvage value of $24,000. On April 3, 2021, the old cutter is exchanged for a new cutter with a fair value of $90,000. The exchange lacked commercial substance. Magnolia also received $20,000 cash. Assume that the last fiscal period ended on December 31, 2020, and that straight-line depreciation is used. Calculate the total gain or loss. Round to the nearest dollar. [class] of $[amount]   Prepare all entries that are necessary on April 3, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round to the nearest dollar. If the line or entry is not necessary, enter “no entry” and input 0 for the amount.) Account Titles and Explanation   Debit Credit To record depreciation expense   [dr1T] [dr1]                    [cr1T] [cr1] To record exchange of machinery   [dr2T] [dr2] [dr3T] [dr3] [dr4T] [dr4] [dr5T] [dr5]                 [cr2T] [cr2]                  [cr3T] [cr3]