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Q3: On May 5, 2021 Vermilion River Adventures purchased a property for $ 400,000 cash. The...

Q3: On May 5, 2021 Vermilion River Adventures purchased a property for $ 400,000 cash. The property included the following long-lived assets: Appraised Value Land $ 120,000 Building 200,000 Equipment 100,000 Paved area 20,000 Outdoor Lighting 10,000 $ 450,000

a) Give the journal entry to allocate the purchase price between the above assets. Round all amounts to the nearest dollar, if necessary.

b) Prepare a compound journal entry to record depreciation of the long-lived assets on December 31, 2021, assuming the following additional details: Useful Life in Years Residual Value Building 30 $ 20,000 Equipment 5 10,000 Paved area 4 -0- Outdoor Lighting 10 -0- Prorate depreciation based on the number of months the asset has been in use.

Q4: Prepare the necessary entries.

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.

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ekkarill92 answered 2 years ago
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