| 6-8 Basket purchase allocation Crow Co. purchased some of the machinery of Hare, |
| Inc., a bankrupt competitor, at a liquidation sale for a total cost of $50,400. Crow’s cost |
| of moving and installing the machinery totaled $4,800. The following data are available: |
| Item | Hares NBV on date of sale | | List Price same Item new | | Appraiser estimate of FMV |
| Punch press | $30,240 | | $54,000 | | $36,000 |
| Lathe | $24,192 | | $27,000 | | $18,000 |
| Welder | $6,048 | | $9,000 | | $6,000 |
| Total | $60,480 | | $90,000 | | $60,000 |
| Required: |
| a. Calculate the amount that should be recorded by Crow Co. as the cost of each piece of equipment |
| First calculate the value of the equipment | | | | | Cost |
| | | | | | Move/Install |
| | | | | | Total |
| Item | Appraiser estimate of FMV | | % of Total | | Total Allocated | | Purcase Price Allocation |
| Punch press |
| Lathe |
| Welder |
| Total |
| b. Which of the following alternatives should be used as the depreciable life for Crow Co.’s depreciation calculation? Explain your answer. |
| The remaining useful life to Hare, Inc. |
| The life of a new machine. |
| The useful life of the asset to Crow Co. |
| 6-20 Transaction analysis—various accounts Prepare an answer sheet with the fol-lowing column headings. For each of the following transactions or adjustments, in-dicate the effect of the transaction or adjustment on assets, liabilities, and net income by entering for each account affected the account name and amount and indicating whether it is an addition (1) or a subtraction (2). Transaction a has been done as an illustration. Net income is not affected by every transaction. In some cases, only one column may be affected because all of the specific accounts affected by the transac-tion are included in that category |
| | | Assets | | Liabilities | | Net Income |
| | | Acct | $ | Acct | $ | Acct | $ |
| a | | Accumulated Depr | ($200) | | | Depr exp | ($200) |
| b |
| c |
| d |
| e |
| f |
| g |
| h |
| 7-12 Unearned revenues—ticket sales Kirkland Theater sells season tickets for six events at a price of $378. For the 2013 season, 1,200 season tickets were sold. | | | | | | Price | $378 |
| | | | | | | Tickets | 1,200 |
| Required: |
| a. Use the horizontal model (or write the journal entry) to show the effect of the sale of the season tickets. |
| Balance sheet | | | | | | Income statement |
| Assets | | Liabilities | | SE | | Income |
| Acct | $ | Acct | $ | Acct | $ | Acct | $ |
| b. Use the horizontal model (or write the journal entry) to show the effect of presenting an event. |
| Balance sheet | | | | | | Income statement |
| Assets | | Liabilities | | SE | | Income |
| Acct | $ | Acct | $ | Acct | $ | Acct | $ |
| c. Where on the balance sheet would the account balance representing funds received for performances not yet presented be classified? |
| 7-24 Transaction analysis—various accounts Enter the following column headings |
| Enter the transaction/adjustment letter in the first column and show the effect, if any, |
| of each transaction/adjustment on the appropriate balance sheet category or on net |
| income by entering for each category affected the account name and amount, and in- |
| dicating whether it is an addition (1) or a subtraction (−). Items that affect net income |
| should not also be shown as affecting stockholders’ equity. You may also write the |
| journal entries to record each transaction/adjustment |
| | Current assets | | Noncurrent asset | | Current Liability | | Non current liability | | SE | | Net income |
| | Acct | $ | Acct | $ | Acct | $ | Acct | $ | Acct | $ | Acct | $ |
| a |
| b |
| c |
| d |
| e |
| f |
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week___3_graded_homework-students.xlsx
