Question

Need help with journal entry, Depreciation equipment, and amortization licensing rights.

Required Information [The following information applies to the questions displayed below) Precision Construction entered into the following transactions during a recent year January 2 Purchased a bulldorer for $278,000 by paying 634,000 cash and igning a $244.000 note due in five years. January 3 Replaced the steel tracks on the bulldozer at a cost of $34,000. parchased on account. The new steel tracks increase the bulldozer's operating officiency: January 30 Wrote a check for the amount owed on account for the work completed on January February 1 Repaired the leather seat on the bulldozer and wrote check for the full $2,200 cost. March 1 Paid $12,000 cash for the right to use computer software for two-year period. 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 $54,000 residual value. 3. Prepare a journal entry to record the depreciation and amortization calculated in requirement 2

Answer 1

1)

Date	General Journal	Debit	Credit
Jan-02	Equipment	278,000.00
	Cash		34,000.00
	Notes Payable (long-term)		244,000.00
Jan-03	Equipment	34,000.00
	Accounts Payable		34,000.00
Jan-30	Accounts Payable	34,000.00
	Cash		34,000.00
Feb-01	Repairs and Maintenance Expense	2,200.00
	Cash		2,200.00
Mar-01	Licensing Rights	12,000.00
	Cash		12,000.00

2)Equipment = 312,000 x 2/5 x 3/12 = 31,200

Licensing Rights = 12,000 x 1/2 x 1/12 = 500

3)

Date	General Journal	Debit	Credit
Mar-31	Depreciation Expense	31,200.00
	Amortization Expense	500.00
	Accumulated Depreciation		31,200.00
	Accumulated Amortization		500.00