In 2009, Giganto, Corp. acquired the following PP&E assets. All amounts were paid in cash. On January

Question:

In 2009, Giganto, Corp. acquired the following PP&E assets. All amounts were paid in cash.
•On January 2, Giganto acquired a supercomputer for $49,000. Delivery and insurance during shipping was $1,200. Giganto had to install, at a cost of $3,000, an antistatic raised ﬂoor in the computer room before the computer could be used. Testing the computer cost $1,800, and the insurance was $900 for the ﬁrst year. Giganto expects to use the computer for ten years. The expected of the computer is $1,000.
•On March 30, Giganto bought a $25,000 delivery van. Sales tax was $1,500. Annual license and registration fees totaled $340. Giganto’s logo was painted on the van at a cost of $1,300. Giganto expects to use the van for ﬁve years. The expected of the van is $1,800.
•On August 8, Giganto bought land on which it intends to build an ofﬁce building. The land cost was $80,000, which included an $8,000 real estate commission fee. Property taxes paid by Giganto included $2,200 of delinquent taxes from the prior owner and $950 for 2009. Giganto paid $5,000 to raze a building on the property and to grade the land. Giganto expects to begin construction next year and use the building for the next 20 years.
Required:
(a) Prepare the journal entries to record the acquisitions of PP&E assets by Giganto, Inc. during 2009.
(b) Giganto records straight-line depreciation on its PP&E assets each December 31. Prepare the December 31, 2009, adjusting entries for depreciation expense on the assets acquired in 2009.
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...