2) E9-3 (Algo) Determining Financial Statement Effects of an Asset Acquisition and Straight-Line Depreciation [LO 9-2, LO 9-3]O’Connor Company ordered a machine on January 1 at a purchase price of $100,000. On the date of delivery, January 2, the company paid $25,000 on the machine and signed a long-term note payable for the balance. On January 3, it paid $1,000 for freight on the machine. On January 5, O’Connor paid cash for installation costs relating to the machine amounting to $6,000. On December 31 (the end of the accounting period), O’Connor recorded depreciation on the machine using the straight-line method with an estimated useful life of 10 years and an estimated residual value of $10,700. Required:Indicate the effects (accounts, amounts, and + for increase, − for decrease) of each transaction (on January 1, 2, 3, and 5) on the accounting equation.Compute the acquisition cost of the machine.Compute the depreciation expense to be reported for the first year.What should be the book value of the machine at the end of the second year? Compute the acquisition cost of the machine.Acquisition Cost Indicate the effects (accounts, amounts, and + for increase, - for decrease) of each transaction (on January 1, 2, 3, and 5) on the accounting equation. (Enter any decreases to account balances with aminus sign.)DateAssetsLiabilitiesStockholders' Equity+January 1January 2January 2+January 3January 3January 5January 5

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2) E9-3 (Algo) Determining Financial Statement Effects of an Asset Acquisition and Straight-Line Depreciation [LO 9-2, LO 9-3]

O’Connor Company ordered a machine on January 1 at a purchase price of $100,000. On the date of delivery, January 2, the company paid $25,000 on the machine and signed a long-term note payable for the balance. On January 3, it paid $1,000 for freight on the machine. On January 5, O’Connor paid cash for installation costs relating to the machine amounting to $6,000. On December 31 (the end of the accounting period), O’Connor recorded depreciation on the machine using the straight-line method with an estimated useful life of 10 years and an estimated residual value of $10,700.

Required:

Indicate the effects (accounts, amounts, and + for increase, − for decrease) of each transaction (on January 1, 2, 3, and 5) on the accounting equation.
Compute the acquisition cost of the machine.
Compute the depreciation expense to be reported for the first year.
What should be the book value of the machine at the end of the second year?

Compute the acquisition cost of the machine.
Acquisition Cost

Indicate the effects (accounts, amounts, and + for increase, - for decrease) of each transaction (on January 1, 2, 3, and 5) on the accounting equation. (Enter any decreases to account balances with a
minus sign.)
Date
Assets
Liabilities
Stockholders' Equity
+
January 1
January 2
January 2
+
January 3
January 3
January 5
January 5

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