Task:
Prepare one sheet with the column headings as below. For each of the following transactions or adjustments, indicate 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, (+) or a subtraction (-).
A.
Assets Liabilities Net Income
Recorded $200 Accumulated Depreciation
of depreciation Depreciation Expense
expense -200 -200
B. Sold land that had originally cost $13,000 for $11,400 in cash.
C. Recorded a $68,000 payment for the cost of developing and registering a patent.
D. Recognized periodic amortization for the patent (in c above) using the maximum statutory useful life.
E. Capitalized $3,200 of cash expenditures made to extend the useful life of production equipment.
F. Expensed $1,800 of cash expenditures incurred for routine maintenance of production equipment.
G. Sold a used machine for $9,000 in cash. The machine originally cost $30,000 and had been depreciated for the first two years of its five-year useful life using the double-declining-balance method. Compute the balance of the accumulated depreciation account before you can record the sale.
H. Purchased a business for $320,000 in cash. The fair market values of the net assets acquired were as follows: Land, $40,000; Buildings, $200,000; Equipment, $100,000; and Long-Term Debt, $70,000.
I. Recognized periodic amortization of goodwill from the purchase transaction (in h above) using a 40-year useful life.