Part C - Accounting for long-term assets (8 marks) The following transactions were completed by Pearl...

 

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Part C - Accounting for long-term assets (8 marks) The following transactions were completed by Pearl Company during its year ended 31 December 2021: Jan. 1 Jan. 1 Jul. 2 Oct. 1 Nov. 1 Dec. 31 Dec. 31 Required: Purchased a van for $120,000 with a $5,000 salvage value. Also paid $350 for the annual van license. All payments were made in cash. Discarded a machine that had cost $10,000 and had accumulated depreciation of $8,500 as of December 31, 2020, the end of the previous accounting year. The machine had no salvage value. Record the discarding of this machine. Purchased a music copyright for $80,000 with a useful life of 10 years. Paid $2,500 cash for van's yearly oil replacement. Completed the addition and installation of an automated control system to a machine at a cost of $1,800. This improvement results in reduced labor costs for the machine in future periods. Recognized annual depreciation on the van, assuming a 100,000-miles van life while 10,000 miles were driven during 2021. Recognized the annual amortization on the music copyright. Prepare the journal entries to record the above transactions. Part C - Accounting for long-term assets (8 marks) The following transactions were completed by Pearl Company during its year ended 31 December 2021: Jan. 1 Jan. 1 Jul. 2 Oct. 1 Nov. 1 Dec. 31 Dec. 31 Required: Purchased a van for $120,000 with a $5,000 salvage value. Also paid $350 for the annual van license. All payments were made in cash. Discarded a machine that had cost $10,000 and had accumulated depreciation of $8,500 as of December 31, 2020, the end of the previous accounting year. The machine had no salvage value. Record the discarding of this machine. Purchased a music copyright for $80,000 with a useful life of 10 years. Paid $2,500 cash for van's yearly oil replacement. Completed the addition and installation of an automated control system to a machine at a cost of $1,800. This improvement results in reduced labor costs for the machine in future periods. Recognized annual depreciation on the van, assuming a 100,000-miles van life while 10,000 miles were driven during 2021. Recognized the annual amortization on the music copyright. Prepare the journal entries to record the above transactions.

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