Show the calculation of the gain

Assignment Help Accounting Basics

Reference no: EM131030765

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.

Directions: 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.

Directions: 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.

Directions: 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%.

Directions: 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.

Directions: 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 is the Warranty Expense balances for 2008 and 2009?

Reference no: EM131030765

Questions Cloud

Determine the power rating of the heater in kw : When the heat losses from the room on a winter day amount to 6500 kJ/h, the air temperature in the room remains constant even though the heater operates continuously.

Cut taxes were opposed so strongly as treasury secretary : From Myth of the Robber Barons: Explain how Charles Schwab and Andrew Carnegie outperformed competitors and why these methods not successful at U.S. Steel and explain why Andrew Mellon’s attempts to cut taxes were opposed so strongly as U.S. Treasury..

Summarises current state and proposes sustainable strategies : Analyse the information presented and conceptualise the state of environmental planning in Australia. Apply innovative and entrepreneurial thinking and practice to corporate sustainability management in Australia and produce a report that summarise..

Does the current level of customer satisfaction : Write a data analysis report that provides the results to each of the fivehypothesis tests above and make overall recommendations to Computers R Us that management can use for future business decision-making.

Show the calculation of the gain : 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. Directions: Respond to these questions ..

Should a court confirm the award or set it aside : The younger brother also seeks to have the award set aside on the basis of improper conduct in that matters subject to arbitration were discussed between the father and older brother without the younger brother's being present. Should a court conf..

What is the approximate variance of the original portfolio : Suppose the variance of the market is 0.04. What is the approximate variance of the original portfolio? What specific tips should you take to rebalance the portfolio, assuming no security position is completely eliminated?

Determine the rate at which heat needs to be removed : If the temperature of the balls after quenching is 74°C, determine the rate at which heat needs to be removed from the water in order to keep its temperature constant at 50°C.

Industry average of time estimated to complete repair job : Labor costs of an auto mechanic are seldom based on actual hours worked. (Many of us realize this when we have serviced our automobiles). Instead, the amount paid a mechanic is based on an industry average of time estimated to complete a repair job. ..

User Account

All Pages