ACCOUNTING-CantonIndustries acquired equipment at a cost of $126,000

QUESTION

1. CantonIndustries acquired equipment at a cost of $126,000 and a book value of$42,000. Prepare the journal entries torecord the disposal of the equipment under the following independentassumptions.(a)The equipment had no market value and was discarded.(b)The equipment is sold for $53,000.(c)The equipment is sold for $27,000.(d)The equipment is traded-in for a similar asset. The list price of the new equipment is $63,000.2. ConanCorporation purchased land and contracted with a developer to construct anoffice building. Conan Corporation alsoengaged other contractors for fencing, paving, lighting, and landscaping.Using the following data, calculate the cost of the land, thebuilding, and the land improvements.· Purchasedland for $100,000.· Paid$2,000 for seller’s back property taxes.· Paid abuilder $225,000 to design and build the office building.· Paid anexcavation company $6,000 to grade and clear the land to make it suitable forbuilding purposes.· Paid alandscaping company $6,000 for trees and shrubs.· Paid alighting contractor $10,000 for outside lighting around the parking area andsidewalks.· Paid$15,000 to have the parking lot paved.· Paid afence builder $12,000 to construct a security fence around the property· 3. (a) TandemIndustries purchased a patent on January 1, 2014, for $2,000,000. The patent’slegal life is 20 years but the company estimates that the patent’s useful lifewill only be 5 years from the date of acquisition. On June 30, 2014, thecompany paid legal costs of $135,000 in successfully defending the patent in aninfringement suit. Prepare the journal entry to amortize the patent at year endon December 31, 2014.(b) Seminole Partnerspurchased a franchise from Unhealthy Food Company for $400,000 on January 1,2014. The franchise is for an indefinite time period and gives SeminolePartners the exclusive rights to sell Unhealthy Chicken Wings in a particularterritory. Record the journal entry to record the acquisition of the franchiseand any necessary adjusting entry at year end on December 31, 2014.(c) Young Corporationincurred research and development costs of $500,000 in 2014 in developing a newproduct. Record the necessary journalentries during 2014 to record these events and any adjustments at year end onDecember 31, 2014.4. Garbo Company acquiredequipment on January 1, 2013 for $70,000. It is estimated that the equipmentwill have a $5,000 salvage value at the end of its 5-year useful life. It isalso estimated that the equipment will produce 100,000 units over its 5-yearlife.InstructionsAnswer the following independent questions.1. Compute the amount of depreciation expensefor the year ended December 31, 2013, using the straight-line method ofdepreciation.2. If 16,000 units of product are produced in2013 and 24,000 units are produced in 2014, what is the book value of theequipment at December 31, 2014? The company uses the units-of-activitydepreciation method.3. If the company uses thedouble-declining-balance method of depreciation, what is the balance of theAccumulated Depreciation—Equipment account at December 31, 2015?

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