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ACC Problem- Madrasa Inc.

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Question;On December 31, 2012, before the books were closed, the management and accountants of Madrasa Inc. made the following determinations about three depreciable assets.1. Depreciable asset A was purchased January 2, 2009. It originally cost $590,000 and, for depreciation purposes, the straight-line method was originally chosen. The asset was originally expected to be useful for 10 years and have a zero salvage value. In 2012, the decision was made to change the depreciation method from straight-line to sum-of-the-years? digits, and the estimates relating to useful life and salvage value remained unchanged.2. Depreciable asset B was purchased January 3, 2008. It originally cost $168,000 and, for depreciation purposes, the straight-line method was chosen. The asset was originally expected to be useful for 15 years and have a zero salvage value. In 2012, the decision was made to shorten the total life of this asset to 9 years and to estimate the salvage value at $3,100.3. Depreciable asset C was purchased January 5, 2008. The asset?s original cost was $122,400, and this amount was entirely expensed in 2008. This particular asset has a 10-year useful life and no salvage value. The straight-line method was chosen for depreciation purposes.Additional data:1. Income in 2012 before depreciation expense amounted to $354,000.2. Depreciation expense on assets other than A, B, and C totaled $58,200 in 2012.3. Income in 2011 was reported at $390,000.4. Ignore all income tax effects.5. 112,800 shares of common stock were outstanding in 2011 and 2012.;(a) Prepare all necessary entries in 2012 to record these determinations. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

 

Paper#44267 | Written in 18-Jul-2015

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