The following is a list of independent events:
1. A company pays $10,000 cash to purchase equipment at a bankruptcy sale. The equipment's fair value is $15,000.
2. A Canadian company purchases equipment from a company in the United States and pays $5,000 US cash. It cost the company $5,200 Canadian to purchase the U.S. dollars from its bank.
3. A company provides $4,000 of services to a new customer on account.
4. A company hires a new chief executive officer, who will bring significant economic benefit to the company. The company agrees to pay the new executive officer $500,000 per year.
5. A company signs a contract to provide $10,000 of services to a customer. The customer pays the company $4,000 cash at the time the contract is signed.
Instructions
(a) Should the transaction be recorded in the accounting records? Explain why or why not.
(b) If the transaction should be recorded, indicate the amount. Explain.