Question

In: Accounting

Independent Energy depreciates all assets using the straight-line method. The company's fiscal year end is December...

Independent Energy depreciates all assets using the straight-line method. The company's fiscal year end is December 31. The following selected transactions and events occurred during the first three years:

2020

 Jan 1 Purchased equipment from the Equipment World for $214,500 on account.

Independent Energy also incurred freight and installation costs of $1,500 and $4,000 respectively.

Sep 30 Paid for annual insurance of $4,200 and routine maintenance of $1,700 for the

machine. The insurance policy expires on September 30, 2021.

Dec 31 Recorded 2020 depreciation on the basis of an estimated 10-year useful life and

residual value of $20,000.

2021

 Dec 31 Recorded 2021 depreciation and impairment loss (if any). Independent Energy

conducted an impairment assessment as indicators suggested that an impairment may be possible. It was determined that the recoverable amount of the equipment is currently $160,000. The estimated residual value remained unchanged.

2022

 Dec 31 Independent Energy sold the equipment to Engaged Auto Company for

proceeds of $140,000.

Instructions
Prepare the necessary entries. (Show calculations.)

Solutions

Expert Solution

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Question 5 Certossi Service Ltd. uses straight-line depreciation. The company's fiscal year end is December 31....
Question 5 Certossi Service Ltd. uses straight-line depreciation. The company's fiscal year end is December 31. The following transactions and events occurred during their first three years of operations: 2014    Jul       1          Purchased equipment for $32,000 cash, with shipping costs of $2,000.             Nov     3          Incurred ordinary repairs on the computer of $360.             Dec     31        Recorded 2014 depreciation on the basis of a four-year life and estimated residual value of $200. 2015    Dec     31        Recorded 2015 depreciation. 2016    Jan     ...
Marigold Enterprises has a December 31 fiscal year end and uses straight-line amortization to the nearest...
Marigold Enterprises has a December 31 fiscal year end and uses straight-line amortization to the nearest month for its finite-life intangible assets. The company has provided you with the following information related to its intangible assets and goodwill during 2020 and 2021: 2020 Jan. 9 Purchased a patent with an estimated useful life of 5 years and a legal life of 20 years for $45,000 cash. May 15 Purchased another company and recorded goodwill of $490,000 as part of the...
Pronghorn Enterprises has a December 31 fiscal year end and uses straight-line amortization to the nearest...
Pronghorn Enterprises has a December 31 fiscal year end and uses straight-line amortization to the nearest month for its finite-life intangible assets. The company has provided you with the following information related to its intangible assets and goodwill during 2020 and 2021: 2020 Jan. 9 Purchased a patent with an estimated useful life of 5 years and a legal life of 20 years for $45,000 cash. May 15 Purchased another company and recorded goodwill of $560,000 as part of the...
at December 31, the company's fiscal year-end. The 2020 balance sheet disclosed the following: Current assets:...
at December 31, the company's fiscal year-end. The 2020 balance sheet disclosed the following: Current assets:       Receivables, net of allowance for uncollectible accounts of $35,000 $ 457,000 During 2021, credit sales were $1,775,000, cash collections from customers $1,855,000, and $40,000 in accounts receivable were written off. In addition, $3,500 was collected from a customer whose account was written off in 2020. An aging of accounts receivable at December 31, 2021, reveals the following: Required: 1. Prepare summary journal entries to account for...
Vogel Manufacturing has a December 31 year end and uses the straight-line method for depreciating its...
Vogel Manufacturing has a December 31 year end and uses the straight-line method for depreciating its equipment and the double-diminishing-balance method for its trucks. Vogel began 2021 with a single piece of equipment that had been purchased on January 1, 2020, for $255,000 and a truck that had been purchased on January 1, 2019, for $148,000. When the equipment was purchased, Vogel's management had estimated that it would have a residual value of $15,000 and a useful life of five...
Alpha Company uses the straight-line method for amortization of all bond premium & discounts. During fiscal...
Alpha Company uses the straight-line method for amortization of all bond premium & discounts. During fiscal year 2016 Alpha had the following bond payable transactions: January 2, issued ten, $1,000 bonds at 101 1/2. These 5-year bonds are dated January 1, 2016. The contract interest rate is 6%.  Interest is payable semi-annual on January 1 and July 1. July 1, Alpha issued $500,000 of 10%, 10-year bonds.  The bonds are dated January 1, 2016 were issued at 98 1/2, and pay interest...
Alpha Company uses the straight-line method for amortization of all bond premium & discounts. During fiscal...
Alpha Company uses the straight-line method for amortization of all bond premium & discounts. During fiscal year 2017 Alpha had the following bond payable transactions: January 2, issued ten, $1,000 bonds at 101. These 5-year bonds are dated January 1, 2017. The contract interest rate is 6%.  Interest is payable semi-annual on January 1 and July 1. July 1, Alpha issued $400,000 of 10%, 10-year bonds.  The bonds are dated January 1, 2017 were issued at 90, and pay interest on July...
Halsey Company uses the straight-line method for amortization of all bond premium & discounts. During fiscal...
Halsey Company uses the straight-line method for amortization of all bond premium & discounts. During fiscal year 2017 Halsey had the following bond payable transactions: January 2, issued ten, $1,000 bonds at 101. These 5-year bonds are dated January 1, 2017. The contract interest rate is 6%.  Interest is payable semi-annual on January 1 and July 1. July 1, Halsey issued $400,000 of 10%, 10-year bonds.  The bonds are dated January 1, 2017 were issued at 90, and pay interest on July...
The method of depreciation was changed from the double-declining-balance method to the straight-line method in fiscal...
The method of depreciation was changed from the double-declining-balance method to the straight-line method in fiscal 2015. A machine was purchased on January 1, 2014 at a cost of $150,000. The machine has an estimated useful life of 10 years and a residual value of $9,000. What should have been booked as depreciation expense in fiscal 2015?
Domingo Corporation changed the way it depreciates its computers from the sum-of-the-year’s-digits method to the straight-line...
Domingo Corporation changed the way it depreciates its computers from the sum-of-the-year’s-digits method to the straight-line method beginning January 1, 2018. Domingo also changed its estimated residual value used in computing depreciation for its office building. At the end of 2018, Domingo changed the specific subsidiaries constituting the group of companies for which its consolidated financial statements are prepared. Required: 1. For each accounting change Domingo undertook, indicate the type of change and how Domingo should report the change. Be...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT