- Raider Co Recently Acquired All Of Lost Arc Inc S Net Assets In A Business Acquisition The Cash Purchase Price Was 1 (75.63 KiB) Viewed 14 times
Crow Co. purchased some of the machinery of Hare, Inc., a bankrupt competitor, at a liquidation sale for a total cost of $16,000. Crow's cost of moving and installing the machinery totaled $2,800. The following data are available: Item Punch press Lathe Welder Punch press Lathe Welder Total Hare's Net Book Value on the Date of Sale $10,760 8,510 2,430 Purchase Price Allocation $ Required: a. Calculate the amount that should be recorded by Crow Co. as the cost of each piece of equipment. $ List Price of Appraiser's Same Item If Estimate 12,244 5,714 2,473 20,431 New $ 17,000 10,000 5,000 of Fair Value $ 15,000 5,000 3,030 b. Which of the following alternatives should be used as the depreciable life for Crow Co.'s depreciation calculation? O The life of a new machine. The remaining useful life of the asset to Crow Co. O The remaining useful life to Hare, Inc.
For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and net income by entering for each account affected the account name and amount and indicating whether it is an addition (+) or a subtraction (-). Transaction a has been done as an illustration. Net income is not affected by every transaction. In some cases, only one column may be affected because all of the specific accounts affected by the transaction are included in that category. a. Recorded $200 of depreciation expense. b. Sold land that had originally cost $9,000 for $13,000 in cash. c. Acquired a new machine under a capital lease. The present value of future lease payments, discounted at 11%, was $11,000. d. Recorded the first annual payment of $2,200 for the leased machine (in part c). e. Recorded a $5,600 payment for the cost of developing and registering a trademark. f. Recognized periodic amortization for the trademark (in part e) using a 38-year useful life. g. Sold used production equipment for $17,000 in cash. The equipment originally cost $46,000, and the accumulated depreciation account has an unadjusted balance of $23,400. It was determined that a $1,800 year-to-date depreciation entry must be recorded before the sale transaction can be recorded. Record the adjustment and the sale. Transaction a. b. C. d. e. f. g. Asset Accumulated depreciation -200 Land -9000 Cash +13000 Machine +11000 Cash -2200 Cash -5600 Trademark +5600 Amortization expense -147 Accumulated depreciation +1800,-25200 Equipment -46000 Liabilities Capital lease liability +11000 Capital lease liability -990 Net Income Depreciation expenses -200 Gain on sale of land +4000 Interest expense -1210 Amortization expense -147 Depreciation expense -1800 Loss on sale of equipment -3800
For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and net income by entering for each account affected the account name and amount and indicating whether it is an addition (+) or a subtraction (-). Transaction a has been done as an illustration. Net income is not affected by every transaction. In some cases, only one column may be affected because all of the specific accounts affected by the transaction are included in that category. a. Recorded $200 of depreciation expense. b. Sold land that had originally cost $14,000 for $10,500 in cash. c. Recorded a $61,000 payment for the cost of developing and registering a patent. d. Recognized periodic amortization for the patent (in part c) using the maximum statutory useful life. e. Capitalized $3,300 of cash expenditures made to extend the useful life of production equipment. f. Expensed $1,900 of cash expenditures incurred for routine maintenance of production equipment. g. Sold a used machine for $7,700 in cash. The machine originally cost $29,100 and had been depreciated for the first two years of its five-year useful life using the double- declining-balance method. (Hint: You must compute the balance of the accumulated depreciation account before you can record the sale.) h. Purchased a business for $340,000 in cash. The fair values of the net assets acquired were as follows: Land, $37,000; Buildings, $192,000; Equipment, $96,000; and Long- Term Debt, $69,200. Transaction a. b. C. d. e. f. g. h. Asset Accumulated depreciation -200 Liabilities Net Income Depreciation expenses -200