Accounting Help
giry1021
hho9e_p9_29a_eip_stud.xlsxP9-29A
| Accounting, 9e | ||||||
| P9-29A | Lump sum asset purchases, partial year depreciation, and impairments | |||||
| LO 2,3 [20-25 minutes] | ||||||
| Students please fill-in areas that are shaded | ||||||
| Student Name | ||||||
| Course Name | ||||||
| Student ID: | ||||||
| Date: | ||||||
| Gretta Chung Associates surveys American eating habits. The company’s accounts | ||||||
| include Land, Buildings, Office equipment, and Communication equipment, with a | ||||||
| separate accumulated depreciation account for each asset. During 2012 and 2013, | ||||||
| Gretta Chung completed the following transactions: | ||||||
| 2012 | ||||||
| Jan 1 | Traded in old office equipment with book value of $40,000 (cost of $132,000 | |||||
| and accumulated depreciation of $92,000) for new equipment. Chung also | ||||||
| paid $80,000 in cash. Fair value of the new equipment is $119,000. | ||||||
| Apr 1 | Acquired land and communication equipment in a group purchase. Total | |||||
| cost was $270,000 paid in cash. An independent appraisal valued the land | ||||||
| at $212,625 and the communication equipment at $70,875. | ||||||
| Sep 1 | Sold a building that cost $555,000 (accumulated depreciation of $255,000 | |||||
| through December 31 of the preceding year). Chung received $370,000 | ||||||
| cash from the sale of the building. Depreciation is computed on a | ||||||
| straight-line basis. The building has a 40-year useful life and a residual | ||||||
| value of $75,000. | ||||||
| Dec 31 | Recorded depreciation as follows: | |||||
| →Communication equipment is depreciated by the straight-line method over a | ||||||
| five-year life with zero residual value. | ||||||
| →Office equipment is depreciated using the double-declining-balance method over | ||||||
| five years with $2,000 residual value. | ||||||
| 2013 | ||||||
| Jan 1 | The company identified that the communication equipment suffered significant | |||||
| decline in value. The fair value of the communication equipment was | ||||||
| determined to be $55,000. | ||||||
| Requirements | ||||||
| 1. | Record the transactions in the journal of Gretta Chung Associates. | |||||
| Test Your Knowledge | ||||||
| P9-29A | ||||||
| Req. 1 | ||||||
| Journal | ||||||
| DATE | ACCOUNTS AND EXPLANATIONS | DEBIT | CREDIT | |||
| 2012 | ||||||
| Jan. 1 | Office equipment (new) | |||||
| Apr. 1 | ||||||
| Sept. 1 | ||||||
| Sept. 1 | ||||||
| Dec. 31 | ||||||
| Dec. 31 | ||||||
| 2013 | ||||||
| Jan. 1 | ||||||
Jennie April 23
