Accounting Chapter 8 The Company Had Taken 59000 Depreciation The

233.

A company purchased mining property for $4,875,000 containing an estimated 15,000,000

tons of ore. In Year 1, it mined 689,000 tons of ore and in Year 2, it mined 935,000 tons.

Calculate the depletion expense for Year 1 and Year 2 and determine the book value of the

property at the end of Year 2.

234.

A company purchased mining property for $1,837,500 containing an estimated 7,350,000

tons of ore. In Year 1, it mined and sold 857,000 tons of ore. Calculate the depletion

expense for Year 1 and prepare the journal entry to record the depletion.

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235.

Record the following events and transactions for Leonard Company for the current year.

1. On January 2, Leonard purchased a patent for $35,000 with a remaining useful life of 10

years. Prepare the journal entry to amortize the patent at the end of the first year.

2. On January 3, Leonard made an advance payment on a leasehold of $840,000. The

leasehold expires in 15 years. Prepare the journal entry to amortize the leasehold at the

end of the first year.

3. On January 4, Leonard purchased a music distributor’s collection of lyrics and songs for

$1,425,000. The copyrights have a remaining life of another 30 years. Prepare the journal

entry to amortize the copyright at the end of the first year.

236.

A company traded an old forklift for a new forklift, receiving a $13,500 trade-in allowance

and paying the remaining $47,200 in cash. The old forklift had cost $43,000, a 5-year

useful life and a $5,000 salvage value. Straight-line accumulated depreciation of $27,200

had been recorded as of the exchange date.

1. What was the book value of the old forklift on the date of the exchange?

2. What amount of gain or loss (indicate which) should be recognized in recording the

exchange, assuming the transaction has commercial substance?

3. What amount should be recorded as the cost of the new forklift?

237.

A machine had an original cost of $60,000. After $45,000 of depreciation was recorded, the

machine was traded in on a new machine priced at $75,000. A $10,500 trade-in allowance

was received on the old machine and the balance of $64,500 was paid in cash. This

transaction has commercial substance. Prepare the general journal entry to record this

trade-in.

238.

A company exchanged its used machine for a new machine in a transaction that had

commercial substance. The old machine cost $68,000, and the new one had a cash price

of $95,000. The company had taken $59,000 depreciation on the old machine and was

allowed a $2,500 trade-in allowance and the balance of $92,500 was paid in cash. What

gain or loss should be recorded on the exchange?

239.

A company exchanged an old automobile for a newer model. The old automobile account

had a cost of $36,000 and accumulated depreciation of $25,000 as of the exchange date.

The new automobile had a cash price of $34,000, but the company was given a $15,000

trade-in allowance and the balance of $19,000 was paid in cash. Prepare the journal entry

to record the exchange, if the transaction lacks commercial substance.

240.

During the current year, a company exchanged an old truck costing $58,000 with

accumulated depreciation of $52,000 for a new truck. The new truck had a cash price of

$80,000 and the company received a $16,000 trade-in allowance on the old truck with the

balance of $64,000 paid in cash. Prepare the journal entry to record the exchange,

assuming the transaction lacked commercial substance.

241.

During the current year, Beldon Co. acquired a new computer with a cash price of $12,800

by exchanging an old one on which the company received a $1,500 trade-in allowance

(with the balance of $11,300 paid in cash). The old computer cost $9,000 and its

accumulated depreciation was $5,500 as of the exchange date. Assuming the exchange

transaction had commercial substance, prepare the journal entry to record the exchange.

242.

A company purchased store equipment for $4,300 by trading in old equipment with a cost

of $2,000 and that had accumulated depreciation of $1,900 as of the exchange date. The

company received a $75 trade-in allowance for the old equipment with the balance of

$4,225 paid in cash. Prepare the journal entry to record the exchange, assuming the

transaction had commercial substance.

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243.

On April 1 of the current year, a company traded an old machine that originally cost

$32,000 and that had accumulated depreciation of $24,000 for a similar new machine that

had a cash price of $40,000.

1. Prepare the entry to record the exchange under the assumption that a $5,000 trade-in

allowance was received and the balance of $35,000 was paid in cash. Assume the

exchange transaction had commercial substance.

2. Prepare the entry to record the exchange under the assumption that instead of a $5,000

trade-in allowance, a $12,500 trade-in allowance was received and the balance of $27,500

was paid in cash. Assume the exchange transaction lacked commercial substance.

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244.

Identify the balance sheet classification of each of the following assets by placing an X in

the correct classification: Plant Assets, Natural Resources, or Intangibles.

Plant

assets

Natural

Resources

Intangible

Assets

a.

Trademark

b.

Oil field

c.

Gold mine

d.

Building

e.

Franchise

f.

Timberland

g.

Patent

h.

Land

i.

Copyright

j.

Leasehold

a.