Question

mework Help Seve Required information PA9-3 Analyzing and Recording Long-Lived Asset Transactions with Partial-Year Depreciation (LO 9-2, LO 9-3, LO 9-6] [The following information applies to the questions displayed below] Precision Construction entered into the following transactions during a recent year. January 2 Purchased a bulldozer for $252,000 by paying $21,000 cash and signing a $231,000 note due in five years. January 3 Replaced the steel tracks on the bulldozer at a cost of $21,000, purchased on account. The new steel tracks increase the bulldozer's operating efficiency. January 30 Wrote a check for the amount owed on account for the work completed on January 3. February 1 Repaired the leather seat on the bulldozer and wrote a check for the full $900 cost. March 1 Paid $4,200 cash for the rights to use computer software for a two-year period. PA9-3 Part 1-b to 3 1-b. Prepare the journal entries for each of the above transactions. 2. For the tangible and intangible assets acquired in the preceding transactions, determine the amount of depreciation and amortization that Precision Construction should report for the quarter ended March 31 The equipment is depreciated using the double-declining-balance method with a useful life of five years and 541,000 residual value 3. Prepare a journal entry to record the depreciation and amortization calculated in requirement 2 Next > < Prev of 5 4 e to search DELL

Answer 1

Required 1 -b :
Date	General Journal	Debit	Credit
Jan-02	Bulldozer	$ 252,000
	Cash		$ 21,000
	Note Payable		$ 231,000
	(To record purchase of Bulldozer )
Jan-03	Bulldozer	$ 21,000
	Accounts payable		$ 21,000
	(To record replaced track on Bulldozer)
Jan-30	Accounts Payable	$ 21,000
	Cash		$ 21,000
	(To record paid cash for replaced track on Bulldozer )
Feb-01	Repair and maintenance Expense	$ 900
	Cash		$ 900
	(To record Repaired Leather seat on Bulldozer )
Mar-01	Computer software	$ 4,200
	Cash		$ 4,200
	(To record purchase computer software )

Required 2 :

Depreciation -equipment = $ 27,300

Amortization -Licensing Rights = $ 175

Explanation :

Double declining Depreciation = 2 * Straight line depreciation percent

Straight line depreciation percent = 1/ useful life

Straight line depreciation percent = 1/ 5 Years

Straight line depreciation percent = 20 %

Double declining Depreciation = 2 * Straight line depreciation percent

Double declining Depreciation = 2 * 20% = 40 %

Depreciation expenses for 3 months under Double declining Depreciation:

Depreciation expenses = 40 % * Book value at Beginning of period

Here, Book value at Beginning of period= $ 252,000 +$ 21,000 = $ 273,000

Depreciation expenses = 40 % * Book value at Beginning of period

Depreciation expenses = 40 % * $ 273,000 * 3/12 Months

Depreciation expenses = $ 27,300

Amortization -Licensing Rights :

Amortization -Licensing Rights = $4,200/ 2 Years * 1/12 Months

Amortization -Licensing Rights = $175

Required 3 :
Date	General Journal	Debit	Credit
Mar-31	Depreciation Expense- Equipment	$ 27,300
	Accumulated Depreciation		$ 27,300
	(To record Depreciation expenses for 3 months)
Mar-31	Amortization Expense-Computer software	$ 175
	Accumulated Amortization		$ 175
	(To record Amortization expenses for 1 month)