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 salvage value 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 salvage value 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.


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  • CreatedMarch 27, 2015
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