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Problem 6-27 Computing and recording units-of-production depreciation
McNabb Corporation purchased a delivery van for $25,500 in 2012. The firm’s financial condition immediately prior to the purchase is shown in the following horizontal statements model:
Assets = Equity Rev. - Exp. = Net Inc. Cash Flow
Cash + Value of Van = Com. Stk. Ret. Earn.
$50,000 + NA = $50,000 + NA NA – NA = NA
Problem 6-28 Determining the effect of depreciation expense on financial statements
Three different companies each purchased a machine on January 1, 2012, for $54,000. Each machine was expected to last five years or 200,000 hours. Salvage value was estimated to be $4000. All three machines were operated for 50,000 hours in 2012, 55,000 hours in 2013, 40,000 hours in 2014, 44,000 hours in 2015, and 31, 000 hours in 2016. Each of the three companies earned $30,000 of cash revenue during each of the five years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company C uses units-of-production depreciation.
Problem 6-32 Accounting for intangible assets
Mia-Tora Company purchased a fast-food restaurant for $1,400,000 in 2012. The fair market values of the assets purchased were as follows. No liabilities were assumed.
Franchise(5 year life) 100,000
Calculate the amount of goodwill purchase.