ACCT 1201 Chapter Notes - Chapter 8: Asset, Web Development

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greenporcupine206

26 Jan 2015

School

Northeastern University

Department

Accounting

Course

ACCT 1201

Professor

Kim Jackson

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Document Summary

Assets: long-lived assets, tangible assets: land, building, and equipment, intangible assets: patents, copyrights. Net cash equivalent amount paid or to be paid for the asset. Repairs, maintenance, and additions: ordinary repairs and maintenance (revenue expenditures) Recorded as expenses: additions and improvements (capital expenditures) Allocating the cost of buildings and equipment over their useful lives: net book value (carrying value) Actual production: double declining-balance method (cost accumulated depreciation) . If net book value > estimated future cash flows. Impairment loss = net book value fair value: disposal. Depletion: allocation of a natural resource over its exploitation. Acquisition and amortization of intangible assets: definite life. Amortization: allocation of an intangible asset over its useful life. Goodwill: excess of purchase price over the fair value. The only way to report goodwill is to purchase another business. Copyrights: use a literary, musical, or artistic piece(70 years after author"s death) Technology: costs for computer software and web development.

Related Questions

In January 2013, Mitzu Co. pays $2,700,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $579,500, with a useful life of 20 years and an $90,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $549,000 that are expected to last another 18 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $1,921,500. The company also incurs the following additional costs:


Cost to demolish Building 1	$	338,400
Cost of additional land grading		187,400
Cost to construct new building (Building 3), having a useful life of 25 years and a $400,000 salvage value		2,282,000
Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value		173,000

value:
10.00 points

Required information

Required:

1.	Allocate the costs incurred by Mitzu to the appropriate columns and total each column.

Allocation of purchase price	Appraised Value	Percent of Total Appraised Value	x	Total cost of acquisition	=	Apportioned Cost
Land			x		=
Building 2			x		=
Land Improvements 1			x		=
Totals

	Land	Building 2		Building 3		Land Improvements 1	Land Improvements 2
Purchase Price
Demolition
Land grading
New building (Construction cost)
New improvements cost
Totals

Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1, 2013.

2.Journal entry worksheet

Record the costs of the plant assets.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
Jan 01

3.	Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the 12 months of 2013 when these assets were in use.

Record the year-end adjusting entry for the depreciation expense of Building 2.

Date	General Journal	Debit	Credit
Dec 31

carminesea-lion120

Timberly Construction negotiates a lump-sum purchase of several assets from a company that is going out of business. The purchase is completed on January 1, 2017, at a total cash price of $840,000 for a building, land, land improvements, and four vehicles. The estimated market values of the assets are building, $504,900; land, $297,000; land improvements, $79,200; and four vehicles, $108,900. The companyâs fiscal year ends on December 31.

Required:

1-a. Prepare a table to allocate the lump-sum purchase price to the separate assets purchased.
1-b. Prepare the journal entry to record the purchase.
2. Compute the depreciation expense for year 2017 on the building using the straight-line method, assuming a 15-year life and a $31,000 salvage value.
3. Compute the depreciation expense for year 2017 on the land improvements assuming a five-year life and double-declining-balance depreciation.

Timberly Construction negotiates a lump-sum purchase of several assets from a company that is going out of business. The purchase is completed on January 1, 2017, at a total cash price of $820,000 for a building, land, land improvements, and four vehicles. The estimated market values of the assets are building, $497,500; land, $318,400; land improvements, $79,600; and four vehicles, $99,500. The companyâs fiscal year ends on December 31.

Required:

1-a. Prepare a table to allocate the lump-sum purchase price to the separate assets purchased.
1-b. Prepare the journal entry to record the purchase.
2. Compute the depreciation expense for year 2017 on the building using the straight-line method, assuming a 15-year life and a $30,000 salvage value.
3. Compute the depreciation expense for year 2017 on the land improvements assuming a five-year life and double-declining-balance depreciation.

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ACCT 1201 Chapter Notes - Chapter 8: Asset, Web Development

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