Question: BSP Company completed the following transactions during fiscal year 2014 January

BSP Company completed the following transactions during fiscal year 2014:
January 1 Purchased a patent for $ 28,000 cash, with an estimated useful life of seven years.
April 1 Purchased the assets (not detailed) of another business for $ 164,000 cash, including $ 10,000 for goodwill. The company assumed no liabilities. Goodwill has an indefinite life.
October 15 Paid $ 5,500 for regular maintenance and ordinary repairs.
December 31 Constructed a storage shed on land leased from D. Heald at a cost of $ 15,600. The lease will expire in three years. (Amounts spent to enhance leased property are capitalized as intangible assets called leasehold improvements.)
December 31 Sold Machine A for $ 6,000 cash. The machine was purchased on January 1, 2011, for $ 25,000. It had a useful life of five years and a residual value of $ 5,000. Its accumulated depreciation totalled $ 12,000 as at December 31, 2013.
December 31 Paid $ 5,200 for a complete reconditioning of Machine B, which was acquired on January 1, 2013, for $ 31,000. The machine had a useful life of 15 years and a residual value of $ 7,000. The company uses the straight- line method of depreciation and amortization.
1. Indicate the accounts affected, amounts, and direction of the effects (1 for increase, 2 for decrease, and NE for no effect) of each transaction on the accounting equation. Use the following structure:
2. Compute the amount of depreciation expense for Machine B to be recorded at December 31, 2015, the company’s year- end.

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  • CreatedAugust 04, 2015
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