Question - Your business acquired 4 pieces of equipment $12,000 each, for cash, with an estimated 4 year life and no residual value. At the time of the purchase it was decided that one will be used by the company, and you believe you will get most of the benefit at the beginning of its life. The second piece of equipment will be used on your magic carpet research and development (R&D) project, and it has not been determined if it can be used on other R&D projects in the future. It was determined that there was a high demand for the remaining 2 pieces of equipment, so you listed them in your catalog for $25,000 each.
Please answer the following questions. :
1. What are the 4 possible accounting treatments?
2. What additional information do you need?
3. How would each accounting treatment appear on the income statement and balance sheet.