Show all work. Problems worth points indicated.

$1.(8$ points$)$ Robert Parish Corporation purchased a new machine for its assembly process $on$ January $1,2014.$ The cost $of$ this machine was $\frac{?}{(\frac{?}{?}\text{\$}615,000\frac{?}{?}).}$ The company estimated that the machine would have a salvage value $of\frac{?}{(\frac{?}{?}\text{\$}15,000\frac{?}{?})}at$ the end $of$ its service life. Its life $is$ estimated $at5$ years, and its working hours are estimated $at100,000$ hours. Year$-$end $is$ December $31.$

Compute the depreciation expense under the following methods and complete the depreciation schedules below.

$(a)$ Straight$-$line depreciation.

$(b)$ Activity method, assuming that machine usage was $28,000$ hours for $2014$; $29,000$ hours for $2015$; $18,000$ hours for $2016$; $12,000$ hours for $2017$; and $13,000$ hours for $2018.$

$(c)$ Sum$-of-$the$-$years'$-$digits.

$(d)$ Double$-$declining$-$balance.

Straight$-$line

Units$-of-$Production $(Activity)$

Double Declining Balance

$(3$ points$)$ Machinery purchased for $$1,000,000by$ Tom Brady $Co.in2020(at$ the beginning $of$ the

year$)$ was originally estimated $to$ have a life $of10$ years with a salvage value $of$ $$20,000at$ the end

$of$ that time. Depreciation has been recorded for $4$ years $on$ this basis. $In2024,itis$ determined that

the total estimated life should $be12$ years with a salvage value $of$ $$10,000at$ the end $of$ that time.

Assume straight$-$line depreciation.

Instructions

$(a)$ Determine the depreciation expense for $2024.$

$(5$ points$)On$ June $30,2020,$ Pina Company issued $$3,000,000$ face value $of12\%,15-$year bonds

$at$ $$3,461,173\mathrm{.}53,$ a yield $of10\%.$ Pina uses the effective$-$interest method $to$ amortize bond

premium $or$ discount. The bonds pay semiannual interest $on$ June $30$ and December $31.$ Prepare the journal entries $to$ record the following transactions.

$(1)$ The issuance $of$ the bonds $on$ June $30,2020.$

$(2)$ The payment $of$ interest and the amortization $of$ the premium $on$ December $31,2020.$

$(3)$ The payment $of$ interest and the amortization $of$ the premium $on$ June $30,2021.$

$(4)$ The payment $of$ interest and the amortization $of$ the premium $on$ December $31,2021.$

$\begin{array}{cc}\text{D}\text{a}\text{t}\text{e}& \text{A}\text{c}\text{c}\text{o}\text{u}\text{n}\text{t}\text{s}\\ DR& CR\\ \frac{06}{30}\frac{?}{20}& ?\\ ?& ?\\ ?& ?\\ ?& ?\\ \frac{12}{31}\frac{?}{20}& ?\\ ?& ?\\ ?& ?\\ ?& ?\\ \frac{06}{30}\frac{?}{21}& ?\\ ?& ?\\ ?& ?\\ ?& ?\\ ?& ?\\ ?& ?\\ \frac{12}{31}\frac{?}{21}& ?\\ ?& ?\\ ?& ?\\ ?& ?\end{array}$

$(6$ points$)On$ January $1,2019,$ Swifty Company sold $8\%$ bonds having a maturity value $of$ $$500,000,$ which provides the bondholders with $a10\%$ yield. The bonds are dated January $1,2019,$ and mature January $1,2022(3$ year bonds$),$ with interest payable June ${30}^{th}q,$

Page $3$ annual bonds$\frac{1}{1}\frac{?}{19}$ carrying value.

$(4$ points$)On$ January $1,2018,$ Ivanhoe Company acquired a computer from Plato Corporation $by$

issuing $a$ $$600,0004-$year noninterest$-$bearing note, payable $in$ full $on$ December $31,2021.$ Ivanhoe

Company's credit rating permits $itto$ borrow funds from its several lines $of$ credit $at8\%.$ The computer

$is$ expected $to$ have $a5-$year life and $a$ $$30,000$ salvage value.

$a.$ Prepare the journal entry for the purchase $on$ January $1,2018.$

$b.$ Prepare any necessary adjusting entries relative $to$ depreciation $(use$ straight$-$line$)$ and

amortization $(use$ effective$-$interest method$)on$ December $31,2018.$

$(2$ points$)On$ January $1,2018,$ Piper $Co.$ issued ten$-$year bonds with a face value $of$ $$10,000,000$ and $a$

stated interest rate $of10\%,$ payable semiannually $on$ June $30$ and December $31.$ The bonds were sold

$to$ yield $12\%.$

Calculate the issue price $of$ the bond.$(2$ points$)$ Pronghorn Corporation purchases a patent from Crane Company $on$ January $1,2023,$ for

$$300,000.$ The patent has a remaining legal life $of16$ years. Pronghorn feels the patent will $be$ useful

for $12$ years.

Prepare Pronghorn's journal entries $to$ record the purchase $of$ the patent and $2023$ amortization.

$(2$ points$)On$ September $1,2017,$ Sheffield Corporation acquired Aumont Enterprises for a cash

payment $of$ $$1,500,000.At$ the time $of$ purchase, Aumont's balance sheet showed assets $of$

$$580,000,$ liabilities $of$ $$230,000,$ and owners' equity $of$ $$350,000.$ The fair value $of$ Aumont's

assets $is$ estimated $tobe$ $$1,150,000.$

Compute the amount $of$ goodwill acquired $by$ Sheffield.

$(2$ points$)$ Martinez Corporation owns a patent that has a carrying amount $of$ $$295,000.$ Martinez

expects future net cash flows from this patent $to$ total $$260,000.$ The fair value $of$ the patent $is$

$$250,000.$

Prepare Martinez's journal entry $to$ record the loss $on$ impairment $(if$ necessary$).$

$(2$ points$)$ Bridgeport Corporation purchased Johnson Company $3$ years ago and $at$ that time recorded

goodwill $of$ $$210,000.$ The Johnson Division's net assets, including the goodwill, have a carrying

amount $of$ $$620,000.$ The fair value $of$ the division $is$ estimated $tobe$ $$610,000.$

Prepare Bridgeport journal entry $to$ record impairment $of$ the goodwill $(if$ necessary$).$