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Chapter 9 Fixed Assets and Intangible Assets
double-declining-balance method. The following columnar headings are suggested for each schedule:
Year Depreciation
Expense Accumulated
Depreciation, End of Year
Book Value, End of Year
2. Journalize the entry to record the sale. 3. Journalize the entry to record the sale, assuming that the equipment was sold for
88,750 instead of 135,000. PR 9-5A
Transactions for fixed assets, including sale
OBJ. 1, 2, 3
The following transactions, adjusting entries, and closing entries were completed by Legacy Furniture Co. during a three-year period. All are related to the use of delivery
equipment. The double-declining-balance method of depreciation is used. 2012
Jan. 4. Purchased a used delivery truck for 28,000, paying cash. Nov. 2. Paid garage 675 for miscellaneous repairs to the truck.
Dec. 31. Recorded depreciation on the truck for the year. The estimated useful life of the truck is four years, with a residual value of 5,000 for the truck.
2013 Jan. 6. Purchased a new truck for 48,000, paying cash.
Apr. 1. Sold the used truck for 15,000. Record depreciation to date in 2013 for the truck.
June 11. Paid garage 450 for miscellaneous repairs to the truck. Dec. 31. Record depreciation for the new truck. It has an estimated residual value of
9,000 and an estimated life of five years. 2014
July 1. Purchased a new truck for 54,000, paying cash. Oct. 2. Sold the truck purchased January 6, 2013, for 16,750. Record depreciation to
date for 2014 for the truck. Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual
value of 12,000 and an estimated useful life of eight years.
Instructions
Journalize the transactions and the adjusting entries. PR 9-6A
Amortization and depletion entries
OBJ. 4, 5
Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows:
a. Timber rights on a tract of land were purchased for 1,600,000 on February 22. The stand of timber is estimated at 5,000,000 board feet. During the current year, 1,100,000
board feet of timber were cut and sold. b. On December 31, the company determined that 3,750,000 of goodwill was impaired.
c. Governmental and legal costs of 6,600,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 12 years. Amortization is to be for three-
fourths of a year.
Instructions
1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items.
2. Journalize the adjusting entries required to record the amortization, depletion, or im- pairment for each item.
1. a. 352,000
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Chapter 9 Fixed Assets and Intangible Assets
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