Reference no: EM132344321
Question
1. On January 1, 2017, Frostburg Company purchased for $68,500, equipment having a service life of six years and an estimated residual value of $4,000. Frostburg has recorded depreciation of the equipment using the straight-line method. On December 31, 2019, before making any annual adjusting entries, the equipment was exchanged for new machinery having a fair value of $35,000. The transaction has commercial substance. Use this information to record all General Journal entries (without explanation) required to record the events for December 31, 2019.
2. Bowie Company uses a calendar year. On December 31, 2018, after adjusting entries were posted, Bowie Company sold a machine which was originally purchased on January 1, 2015. The historical cost was $24,000, the salvage value assumed was $1,000 and the original estimated life was five years.. It was sold for $4,400 cash. Using this information, how much should be recorded on December 31 for the Gain or (Loss)? Round to whole dollars.
3. Frederick Mining Company owns a large parcel of land which costs $900,000. It is estimated to contain 1,600,000 tons of recoverable ore. It is estimated that the recovery of the ore will take 10 years and that after the ore is fully depleted the land will be sold for a market value of $150,000. In 2018, Frederick extracted and sold 105,000 tons of ore. What is the amount of depletion that should be recorded? Round total the nearest whole dollar.
4. On January 2, 2019, Adelphi Company purchased a patent for $170,000 plus $8,000 in legal fees. On that date, the patent had a remaining legal life of 13 years. Adelphi Company expects to use the patent for 5 years after which time it will be worthless. How much is the annual amortization expense for 2019? Round to nearest whole dollar.
5. Annapolis Company was recently sold for $470,000. Annapolis had assets & liabilities appraised at the time of the sale in the amounts of:
Item Amount
Accounts Receivable assumed by buyer $87,000
Inventory $255,000
Property, Plant & Equipment (net) $560,000
Notes Payable assumed by buyer $705,000
Using this information, how much should be recorded as Goodwill for this transaction?
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