Question 5: 10 Points
Jann Corporation purchased an equipment on July 1, 2016 for $800,000. Management depreciated the equipment using double-declining balance, with an estimated useful life of ten years and $80,000 residual value. On June 30, 2018, Jann Corp. decided to sell the equipment to Murry Corp for $650,000. Prepare the journal entry to record the sale of equipment.
Account
Dr.
Cr.
Question 6: 20 Points
April 1, 2018. ABC purchased an existing factory for 2 million. The price included title to the factory building, manufacturing equipment, and a patent on a process the equipment. At the time of the purchase, the assets' fair values were:
- Building: $450,000
- Equipment: $875,000
- Patent: $625,000
The estimated life of the assets purchased would be:
- Building: 10 years
- Equipment: 5 years
- Patent: 15 years
ABC placed the assets into use on June 1, 2018 and decided that the salvage value and estimated life of the assets are as follows:
Salvage Value Estimated Life
- Building: $550,000 10 years
- Equipment: $0 5 years
- Patent: $0 15 years