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Springfield Corporation and Fred Corporation solution

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Question;1. Springfield Corporation purchases a new machine on;March 3, 20X4 for $35,600 in cash. It pays an additional $3,400 to transport;and set up the machine. Springfield?s accountant determines that the equipment;has no residual value and that the useful life is five years. It is expected to;generate 2,400,000 units during its life. Assume Springfield employs the;half-year convention.;A. Record the;purchase of the machine.;B. Assume that;Springfield uses the straight-line method of depreciation. Record depreciation;expense for the first two years of the machine?s life.;C. Assume that;Springfield uses the double-declining balance method of depreciation. Record;depreciation expense for the first two years of the machine?s life.;D. Assume that;Springfield uses the units-of-production method of depreciation. During Year 1;the machine produces 600,000 units. During Year 2, the machine produces 578,000;units. Record depreciation expense for the first two years of the machine?s;life.;2. On 1/1/X6;Fred Corporation purchases a patent from Barney Company for $10,000,000;payable at the end of three years. The patent itself has an expected life of;ten years. No interest rate is stated, but Fred could borrow that amount from a;bank at 6 percent interest.;A. Record the;journal entry to record the patent on 1/1/X6.;B. Record the;journal entries to record interest expense and amortization expense on;12/31/X6, 12/31/X7, and 12/31/X8.;C. Record the journal entry to show;that Fred pays off the note payable;on 12/31/X8

 

Paper#37589 | Written in 18-Jul-2015

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