Bob the Builder purchases an equipment, which will last 14 years with no residual value on April 1, Year 7. The company issues an $800,000, four-year, non-interest bearing note for the equipment when the prevailing market interest rate for notes of this nature is 8%. The company will pay off the note in four $200,000 installments on each March 31, starting March 31, Year 8. The company adopts mid-month convention for depreciation and depreciation expense is recognized once at the end of the fiscal year, which is December 31, using straight-line method. (1) Calculate depreciation expense to be recognized on December 31, Year 7. (2) Prepare the journal entry related to note payable on March 31, Year 8.
Bob the Builder purchases an equipment, which will last 14 years with no residual value on April 1, Year 7. The company issues an $800,000, four-year, non-interest bearing note for the equipment when the prevailing market interest rate for notes of this nature is 8%. The company will pay off the note in four $200,000 installments on each March 31, starting March 31, Year 8. The company adopts mid-month convention for depreciation and depreciation expense is recognized once at the end of the fiscal year, which is December 31, using straight-line method. (1) Calculate depreciation expense to be recognized on December 31, Year 7. (2) Prepare the journal entry related to note payable on March 31, Year 8.
Chapter12: Current Liabilities
Section: Chapter Questions
Problem 7EA: Homeland Plus specializes in home goods and accessories. In order for the company to expand its...
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Bob the Builder purchases an equipment, which will last 14 years with no residual value on April 1, Year 7. The company issues an $800,000, four-year, non-interest bearing note for the equipment when the prevailing market interest rate for notes of this nature is 8%. The company will pay off the note in four $200,000 installments on each March 31, starting March 31, Year 8. The company adopts mid-month convention for
(1) Calculate depreciation expense to be recognized on December 31, Year 7.
(2) Prepare the
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