Prepare the entry for the exchange

Assignment Help Accounting Basics

Reference no: EM131029849

Instructions:

Create a single Excel document with one worksheet/tab for each problem.

Problem 1: Equipment that cost $80,000 and has accumulated depreciation of $63,000 is exchanged for similar equipment with a fair value of $35,000 and $15,000 cash is received. The exchange lacked commercial substance.

Requirement:

Respond to these questions on a separate Excel spreadsheet as directed on the Problem Set 3 instructions.

a) Show the calculation of the gain to be recognized from the exchange.

b) Prepare the entry for the exchange.

Problem 2: Presented below is information related to copyrights owned by Jeff Corporation at December 31, 2008.

Cost	$2,700,000
Carrying Amount	$2,400,000
Expected Future Net Cash Flows	$2,100,000
Fair Value	$1,400,000

Assume Jeff Corporation will continue to use this asset in the future. As of December 31, 2008, the copyrights have a remaining useful life of 5 years.

Requirement: Respond to these questions on a separate Excel spreadsheet as directed on the Problem Set 3 instructions.

a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2008.

b) Prepare the journal entry to record amortization expense for 2009.

c) The fair value of the copyright at December 31, 2009 is $1,500,000. Prepare the journal entry (if any) necessary to record this increase in fair value.

Problem 3: Dave Co. purchased a patent from Larry Co. for $180,000 on July 1, 2005. Expenditures of $51,000 for successful litigation in defense of the patent were paid on July 1, 2008. Dave Co. estimates that the useful life of the patent will be 20 years from the date of acquisition.

Requirement:

Prepare a computation of the carrying value of the patent as of December 31, 2008 on a separate Excel spreadsheet as directed on the Problem Set 3 instructions.

Problem 4: On January 1, 2008, Michelle Co. issued ten-year bonds with a face value of $1,000,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%.

Requirement:

Prepare your responses on a separate Excel spreadsheet as directed on the Problem Set 3 instructions.

a. Calculate the issue price of the bonds.

b. Without prejudice to your solution in part a, assume that the issue price was $884,000. Prepare the amortization table for 2008, assuming that amortization is recorded on interest payment dates.

Problem 5: Amy Equipment Company sells computers for $1,500 each and also gives each customer a 2-year warranty that requires the company to perform periodic services and to replace defective parts. During 2008, the company sold 700 computers. Based on past experience, the company has estimated the total 2-year warranty costs as $30 for parts and $60 for labor. (Assume sales all occur at December 31, 2008.)

In 2009, Amy Equipment Company incurred actual warranty costs relative to 2008 computer sales of $10,000 for parts and $18,000 for labor.

Requirement:

Prepare your responses to these problems on a separate Excel spreadsheet as directed on the Problem Set 3 instructions.

a) Under the expense warranty treatment, give the entries to reflect the above transactions (accrual method) for 2008 and 2009.

b) Under the cash basis method, what are the Warranty Expense balances for 2008 and 2009?

Reference no: EM131029849

Questions Cloud

The transfer batches at bottleneck be large or small : In general, at a bottleneck operation should the process batch size be large or small?(assume a setup between each batch, and that larger process batches can be formed by combining multiple jop orders for identical or similar items) should the transf..

Determine one possible combination of government spending : Determine one possible combination of government spending increases and tax increases that would accomplish the same goal without changing the amount of outstanding debt.

Phase of establishing a service delivery system : Imagine you are in the planning phase of establishing a service delivery system for a five-star restaurant. Create one service quality standard for this restaurant that could also be used in other industries other than hospitality. Ensure the standar..

Business-level strategies-supermarkets currently pursuing : What business-level strategies are these supermarkets currently pursuing?

Prepare the entry for the exchange : Equipment that cost $80,000 and has accumulated depreciation of $63,000 is exchanged for similar equipment with a fair value of $35,000 and $15,000 cash is received. The exchange lacked commercial substance.

Find the average of the monthly productivity : As operations manager, you are concerned about being able to meet sales requirements in the coming months. You have just been given the following production report: JAN FEB MAR APR Units produced 2,130 1,630 2,630 2,830 Hours per machine 301 181 376 ..

Explain what steve means by high economic profits : Why might his economic profits fromrunning a bed-and-breakfast be higher than those of working as an architect?

What is the percentage change in productivity : A retail store had sales of $45,100 in April and $55,200 in May. The store employs eight full-time workers who work a 40-hour week. In April the store also had seven part-time workers at 10 hours per week, and in May the store had nine part-timers at..

Disputes and disagreements between stakeholders : Conflict is a normal part of the process and the PM must be prepared to deal with it. A project without healthy conflict will fail to realize all the benefits of having a team with diverse skills working together. Conflict in project management means..

User Account

All Pages