Author: Anonymous

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]

Deer Co. reported its expenses of $31,200 on the cash basis. Corporate records revealed the following information: Beginning prepaid expense  $      1,600 Beginning accrued expense  $      1,650 Ending prepaid expense  $      1,900 Ending accrued expense  $      1,300 What amount of expense should the Deer report on its books under the accrual basis?

Pirate Corporation purchased machinery for $895,000 on January 1, 2015. Straight-line depreciation has been recorded based on a $25,000 salvage value and a 7-year useful life. The machinery was sold on April 1, 2021 at a gain of $26,000. How much cash did Pirate receive from the sale of the machinery?

Office furniture cost $848,000 on May 1, 2020. Its estimated salvage value is $75,200 and its expected life is 3 years. Calculate the depreciation expense by straight-line for 2020. (Round answer to 0 decimal places, e.g. 5,275. Do NOT use a dollar sign in your answer.) $ [SL]   Calculate the depreciation expense by double-declining balance for 2021. (Round answer to 0 decimal places, e.g. 5,275. Do NOT use a dollar sign in your answer.) $ [DDB]   Calculate the depreciation expense by sum-of-the-years’-digits for 2021. (Round answer to 0 decimal places, e.g. 5,275. Do NOT use a dollar sign in your answer.) $[SYD]   Which depreciation method results in the smallest income amount for 2021? Use SL for straight line, DDB for double-declining balance, and SYD for sum-of-the-years’-digits. [method]

The following information relates to a patent owned by Scott Company: Cost  $      3,298,000 Carrying amount  $      1,830,000 Expected future net cash flow  $      1,725,000 Fair value  $      1,380,000 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 3 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 $1,748,000. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Round to the nearest dollar. Do NOT use a dollar sign in your answer.) Account Titles and Explanation   DR ($) 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]

EXTRA CREDIT: 4.6 points Presented below is information related to equipment owned by Stark Company at December 31, 2020. Cost $11,200,000 Accumulated depreciation to date $  1,280,000 Expected future net cash flows $  8,000,000 Fair value $  5,440,000 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 $5,440,000. 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]

After an impairment loss is recorded for a limited-life intangible asset, the carrying amount becomes the basis for the impaired asset and is used to calculate amortization in future periods.

Jak Co. has provided the following 20X5 current account balances for the preparation of the annual Statement of Cash Flows: 1-Jan 31-Dec Accounts receivable $11,500 $14,500 Allowance for uncollectible accounts        400        500 Prepaid rent     6,200     4,100 Accounts payable     9,700   11,200 Jak’s 20X5 net income is $75,000. Net cash provided by operating activities in the Statement of Cash Flows should be

Bully Company has the following items: Common Stock 954,000 Treasury stock 306,000 Deferred income taxes 951,000 Retained earnings 648,000 What total amount should Bully Company report as stockholders’ equity?

For a nonmonetary exchange of plant assets, accounting recognition should not be given to