Problemon july 1 2014 ima big corp purchased a machine, Ask an Expert

Accounting

Problem

On July 1, 2014, IMA Big Corp purchased a machine costing $250,000 by putting 20% down and borrowing the remainder from the bank. The machine has an estimated useful life of 5 years, and an estimated salvage value of 10%. IMA uses straight-line depreciation and is a calendar year-end (12/31^st).

REQUIRED:

1) Account for the purchase on 7/1/14 (using the Balance Sheet Equation)
2) At year-end 2014, calculate and account for (using the Balance Sheet Equation) depreciation expense
3) At year-end 2015, calculate and account for (using the Balance Sheet Equation) depreciation expense
4) At 12/31/14, show the Net Book Value
5) At 12/31/15, show the Net Book Value.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92719517

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