Question: Recording Asset Acquisition Costs and Straight-Line Depreciation Conover Company ordered equipment on January 1, 2009, at a purchase price of $30,000. On date of delivery, January 2, 2009, the company paid $8,000 for the equipment and signed a note payable for the balance. On January 3, 2009, it paid $250 for freight on the equipment. On January 5, Conover paid $1,500 cash for installation costs relating to the equipment. On December 31, 2009 (the end of the accounting period), Conover recorded depreciation on the equipment using the straight-line method with an estimated useful life of 10 years and an estimated residual value of $2,750.
Required: 1. Record journal entries, if any, that would be required on January 1, 2, 3, and 5.
2. Compute the acquisition cost of the equipment.
3. Compute the depreciation expense to be reported for 2009, and show the journal entry to record it. 4. What should be the book value of the equipment at the end of 2010?