A.    Quickbooks Company purchased land and a modern office building on March 1 for a combined cash price of $400,000. The land had a cost of $250,000 and the building had a net book value of $50,000 on the seller's books. The land and building had fair market values of $290,000 and $110,000, respectively on March 1. Quickbooks made the following entry at acquisition: 

    Land          350,000

    Building          50,000

        Gain on Purchase              200,000

        Accumulated Amortization       50,000

        Cash             150,000

Prepare the correct entry for the acquisition.

B.    Frye Company bought machinery on January 1, 1999 at a cost of $200,000. The machinery had an estimated life of 10 years and salvage value of $20,000. In December 2001, Frye Company estimates that the machinery will have a life of only 3 more years and an $8,000 salvage value. Frye Company uses straight-line amortization. Calculate the revised annual amortization.

C.    Pioneer Company bought equipment on July 1, 2000 at a cost of $200,000. The equipment has an estimated useful life of 5 years and salvage value of $50,000. Pioneer Company uses the double-declining-balance method of amortization. Calculate amortization for 2000 and 2001.

D.    Thompson Construction sold a crane for $8,000 cash. The crane cost $20,000, had $5,000 of accumulated amortization, and a fair market value of $16,000. In recording the sale, a gain (loss) should be recorded at $_____________.

Instructions:

Complete the requirements specified for each of the following independent situations.

Answer rating: 100% (QA)

A Particulars Debit Credit Land Ac Dr 290000 Building Ac Dr 110000 To Cash 400000 B Annu... View the full answer