Solutions_Exercises_Unit_8

Solutions_Exercises_Unit_8 - Financial Accounting I Grado...

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Financial Accounting I Grado Administracion de Empresa Exercises
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Chapter 8. Intangible Assets Exercise 8.1. Recording transactions involving Tangible and Intangible assets Present journal entries for each of the following transactions of Moon Macrosystems: a. Acquired computers costing $400,000 and computer software costing $40,000 on January 1, 2006. Moon expects the computers to have a service life of 10 years and $40,000 salvage value. It expects the computer software to have a service life of four years and zero salvage value. b. Paid $20,000 to install the computers in the office. Paid $10,000 to install and test the computer software. c. Recorded depreciation and amortization using the straight-line method for 2006 and 2007. Moon records a full year of depreciation in the year of acquisition. Treat depreciation and amortization as a period expense. d. On January 1, 2008, new software offered on the market made the software acquired in part a completely obsolete. Give any required journal entry. e. On January 2, 2008, Moon revised the depreciable life of the computers to a total of 14 years and the salvage value to $56,000. Give the entry to record depreciation for 2008. f. On December 31, 2009, Moon sold the computers for $260,000. Give the required journal entries for 2009. Solution exercise 8.1 (Moon Macrosystems; recording transactions involving tangible and intangible assets.) a. Office Equipment ................................................... 400,000 Computer Software ................................................ 40,000 Cash ................................................................... 440,000 Assets = Liabilities + Shareholders' Equity (Class.) b. Office Equipment ................................................... 20,000 Computer Software ................................................ 10,000 Cash ................................................................... 30,000
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Assets = Liabilities + Shareholders' Equity (Class.) +20,000 +10,000 –30,000 c. 2006 and 2007 Depreciation Expense [($400,000 + $20,000 $40,000)/10] . ...................................................... 38,000 Amortization Expense [($40,000 + $10,000)/4] . .. 12,500 Accumulated Depreciation ................................. 38,000 Computer Software ............................................ 12,500 Assets
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This note was uploaded on 02/03/2011 for the course ECON 101 taught by Professor Flora during the Spring '11 term at Universidad Carlos III de Madrid.

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Solutions_Exercises_Unit_8 - Financial Accounting I Grado...

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