Pane records depreciation and amortization expense. Use the nearest whole month convention, and the double declining balance method for depreciation and the whole-year convention and the straight-line method for amortization. Note that all assets on the books at the beginning of the year are fully depreciated. Use the accumulated depreciation and accumulated amortization accounts. (See Transaction #1, #2, and #8).
8. On July 2, Pane pays cash for a patent that will allow it to produce a revolutionary new window for boats and other marine vehicles called “T-Panes”.
|
Cost of Patent |
$120,000 |
|
Estimated Economic Life (in years) |
12 |
1. On January 5, Pane buys land and a building for one lump-sum of cash.
|
Contract price: |
$590,000 |
|
Fair Value: Land |
$400,000 |
|
Fair Value: Building |
$200,000 |
|
Useful Life of Building (years) |
20 |
2. On January 7, Pane purchases a machine to make stained glass windows. Pane pays cash for the machine. The machine has no residual value.
|
Contract Price: |
$105,500 |
|
Transportation Costs: |
$7,200 |
|
Installation Costs: |
$4,956 |
|
Sales Tax on Contract Price: |
10% |
|
Useful Life of Machine (years) |
6 |
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