II. Broncos Corporation acquired the following assets associated with a manufacturing facility for a lump-sum price of $9,000,000. According to independent appraisals, the fair values were $4,000,000, $2,000,000, $3,000,000, and $1,000,000 for the building, patent, land, and equipment, respectively. What should be the initial value of the patent? Show your computation.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
II. Broncos Corporation acquired the following assets associated with a manufacturing facility for a lump-sum price of $9,000,000. According to independent appraisals, the fair values were $4,000,000, $2,000,000, $3,000,000, and $1,000,000 for the building, patent, land, and equipment, respectively. What should be the initial value of the patent? Show your computation.
III. Shown below is activity for one of the products of Denver Office Equipment:
January 1 balance, 500 units @ $55
Purchases:
January 10: 500 units @ $60
January 20: 800 units @ $63
Sales:
January 12: 750 units
January 28: 650 units
1) Compute the cost of goods sold for January, assuming Denver uses FIFO and periodic inventory system.
Cost of goods sold: $
Your computations:
2) Compute the January 31 cost of ending inventory, assuming Denver uses LIFO and periodic inventory system.
Cost of ending inventory: $
Your computations:
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