Question

Innovative Inventions Ltd. had the following account balances on January 1, 2015:
During the year, the corporation completed the following transactions and adjusting entries affecting long-term assets.
May 1. Purchased a patent from another company for $600,000.
Jul. 5. Sold furniture for $24,000 that was purchased on January 9, 2010, at a cost of $67,200. The furniture was depreciated on a straight-line basis over 10 years with an expected residual value of $2,000. (Record depreciation to date of sale.)
Oct. 1. Purchased equipment for $52,000.
Dec. 31. Innovative Inventions Ltd.’s accountant feels the carrying amount of the business exceeds its fair value by $220,000.
31. Recorded depreciation on the building using the straight-line method, assuming an estimated life of 25 years and a residual value of $300,000.
31. Recorded depreciation on the furniture and equipment using the straight-line method, assuming an estimated useful life of 10 years and no residual value.
31. Recorded amortization on the patents using the double-declining balance method, assuming an estimated useful life of 10 years and a $100,000 residual value.
Instructions
1. Journalize the transactions and the adjusting entries.
2. Prepare the balance sheet presentation for Innovative Inventions’ long-term assets as at December 31, 2015, with comparative amounts for December 31, 2014.


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  • CreatedSeptember 15, 2015
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