50.1K

Verified Solution

Link Copied!

Required information

P$8-6($Algo$)$ Recording Journal Entries Related to Various Long$-$Lived Assets LO$8-2,8-3,8-6$

$[$The following information applies to the questions displayed below.$]$

During the current year ending on December $31,$ BSP Company completed the following transactions:

a$.$ On January $1,$ purchased a patent for $$49,500$ cash $($estimated useful life, nine years$).$

b$.$ On January $1,$ purchased another business for $$163,000$ cash, including $$7,000$ for goodwill. The assets included accounts receivable with a fair value of $$14,000$ and property and equipment with a fair value of $$142,000($with a residual value of $$14,910$ and estimated useful life of $10$ years$).$ The company assumed no liabilities. Goodwill has an indefinite life.

c$.$ On December $31,$ constructed a storage shed on land leased from D$.$ Heald. The cost of the shed was $$16,600.$ The company uses straight$-$line depreciation. The lease will expire in nine years. $($Amounts spent to enhance leased property are capitalized as intangible assets called Leasehold Improvements.$)$

d$.$ Total expenditures for ordinary repairs were $$5,600$ during the current year.

e$.$ On December $31$ of the current year, sold Machine A for $$6,300$ cash. Original cost was $$20,000$; accumulated depreciation to December $31$ of the prior year was $$12,160($on a straight$-$line basis with a $$4,800$ residual value and five$-$year useful life$).$ Record the depreciation expense in transaction e$(1)$ and the sale in transaction e$(2).$

f$.$ On December $31$ of the current year, paid $$7,000$ for a complete reconditioning of Machine B acquired on January $1$ of the prior year. Original cost, $$67,000$; accumulated depreciation to December $31$ of the prior year was $$2,900($on a straight$-$line basis with a $$9,000$ residual value and $20-$year useful life$).$

P$8-6$ Part $1$

Required:

Record journal entries for transactions $($a$)$ through $($f$).$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

Answer & Explanation Solved by verified expert

See Answer