In: Accounting
Question 1: Partial year’s depreciation; alternative methods; exchange/disposal of PPE
Videotron Ltee completed the following transactions involving printing equipment.
Machine 6690 was purchased for cash on May 1, 2020, at an installed cost of $72,900. Its useful life was estimated to be four years with an $8,100 trade-in value. Straight-line depreciation was recorded for the machine at the ends of 2020 and 2021.
On August 5, 2020, it was traded for Machine 6691, which had an installed cash price of $54,000. A trade-in allowance of $40,500 was received and the balance was paid in cash. The new machine’s life was estimated at five years with a $9,450 trade-in value. The fair values of Machines 6690 and 6691 were not reliably determined at the time of the exchange. Double-declining-balance depreciation was recorded on each December 31 of Machine 6691’s life. On February 1, 2025, it was sold for $13,500.
Machine 6711 was purchased on February 1, 2025, at an installed cash price of $79,650. It was estimated that the new machine would produce 75,000 units during its useful life, after which it would have an $8,100 trade-in value. Units-of-production depreciation was recorded on the machine for 2025, a period in which it produced 7,500 units of product. Between January 1 and October 3, 2026, the machine produced 11,250 more units. On October 3, 2026, it was sold for $54,000
Required
Prepare journal entries to record:
Question 2: Intangible assets
On February 3, 2020, Secure Software Group purchased the patent for a new software for cash of $220,800. The company expects the software to be sold over the next five years and uses the straight-line method to amortize intangibles.
Required
Accounts receivable………………………………$285,600
Accumulated depreciation, equipment……………$259,200
Accumulated depreciation, building………………$189,000
Allowance for doubtful accounts……………………$8,400
Cash………………………………………………. $103,200
Equipment…………………………………………$477,600
Building………………………………………… $595,200
Land………………………………………………. $ 110,400
Merchandise inventory…………………………… $ 135,600