Robbins Inc. purchased the following assets of Marine Company for $500,000 cash on September 30, 2016:
|
Land |
$300,000 |
|
Building |
100,000 |
|
Computer software |
75,000 |
The building will be depreciated using the straight-line method. It has an estimated useful life of forty years and a residual value of 10% of cost.
The computer software has an estimated useful life of three years and no residual value. It will be amortized using the double-declining balance method. On January 2, 2017, the value of the computer software was estimated at $50,000. The computer software was sold on September 15, 2018 for $65,000.
Robbins Inc. uses the ½ year rule to calculate depreciation and amortization expense in the year of acquisition and disposal. Its fiscal year-end is December 31.
Required:
- Prepare journal entries to record
- the $500,000 purchase
- depreciation and amortization expense for 2016
- the change in the value of the computer software at January 2, 2017
- the sale of the computer software on September 15, 2018.
- Calculate the carrying amounts of the assets at December 31, 2018.
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