Recording transactions involving tangible and intangible assets . Present journal entries for each of the following transactions
Question:
Recording transactions involving tangible and intangible assets. Present journal entries for each of the following transactions of Moon Macro systems:
(a) Acquired computers costing $400,000 and computer software costing $40,000 on January 1, 2006. Moon expects the computers to have a service life of 10 years and $40,000 salvage value. It expects the computer software to have a service life of four year and zero salvage value.
b. Paid $20,000 to install the computers in the office. Paid $ 10,000 to install and test the computer software.
c. Recorded depreciation and amortization using the straight-line method for 2006 and 2007. Moon records a full year of depreciation in the year of acquisition Treat depreciation and amortization as a period expense.
d. On January 1, 2008, new software offered on the market made the software acquired in part a completely obsolete. Give any required journal entry.
e. On January 2, 2008, Moon revised the depreciable life of the computers to a total of 14 years and the salvage value to $56,000. Give the entry to record depreciation for 2008.
f. On December 31, 2009, Moon sold the computers for $260,000. Give the required journal entries for 2009.
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented... 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...
Step by Step Answer:
Moon Macrosystems recording transactions involving tangible and intangible assets a Office Equipment400000 Computer Software40000 Cash 440000 Assets Liabilities Shareholders Equity Class 400000 40000 440000 b Office Equipment20000 Computer Software10000 Cash 30000 Assets Liabilities Shareholders Equity Class 20000 10000 30000 c 2006 and 2007 Depreciation Expense 400000 20000 400001038000 Amortization Expense 40000 10000412500 Accumulated Depreciation 38000 Computer Software 12500 Assets Liabilities Shareholders Equity Class 38000 38000 IncSt RE 12500 12500 IncSt RE d Impairment Loss of Computer Software 40000 10000 12500 1250025000 Computer Software 25000 Assets Liabilities Shareholders Equity Class 25000 25000 IncSt RE e Depreciation Expense 400000 20000 38000 38000 560001224000 Accumulated Depreciation 24000 Assets Liabilities Shareholders Equity Class 24000 24000 IncSt RE f Depreciation Expense24000 Accumulated Depreciation 24000 Assets Liabilities Shareholders Equity Class 24000 24000 IncSt RE Cash260000 Accumulated Depreciation 38000 38000 24000 24000124000 Loss on Sale of Office Equipment36000 Office Equipment ...View the full answer
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
