On April 7, 2024, Crane Corporation purchased two excavators at auction for a combined total cost of $338,000. The excavators were listed in the auction catalogue at $138,000 for excavator A and $284,000 for excavator B. Immediately after the auction, Crane had the excavators professionally appraised so it could purchase adequate insurance coverage. The appraisal put a fair value of $112,520 on excavator A and $275,480 on excavator B. On April 10, Crane paid a total of $4,000 in transportation charges for the two excavators. On April 28, Crane paid $9,000 for improvements to excavator B and no further expenditures were made for excavator A. On April 30, 2024, both excavators were ready to be used. The company expects excavator A to last eight years and to have a residual value of $7,800 when it is removed from service, and it expects excavator B to be useful for six more years and have a residual value of $19,300 at that time. Due to the different characteristics of the two excavators, different depreciation methods will be used for them: excavator A will be depreciated using the double-diminishing-balance method and excavator B using the straight-line method. (a) Prepare the journal entry to record the purchase of the excavators, indicating the initial cost of each. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation Apr. 07 Debit Credit
On April 7, 2024, Crane Corporation purchased two excavators at auction for a combined total cost of $338,000. The excavators were listed in the auction catalogue at $138,000 for excavator A and $284,000 for excavator B. Immediately after the auction, Crane had the excavators professionally appraised so it could purchase adequate insurance coverage. The appraisal put a fair value of $112,520 on excavator A and $275,480 on excavator B. On April 10, Crane paid a total of $4,000 in transportation charges for the two excavators. On April 28, Crane paid $9,000 for improvements to excavator B and no further expenditures were made for excavator A. On April 30, 2024, both excavators were ready to be used. The company expects excavator A to last eight years and to have a residual value of $7,800 when it is removed from service, and it expects excavator B to be useful for six more years and have a residual value of $19,300 at that time. Due to the different characteristics of the two excavators, different depreciation methods will be used for them: excavator A will be depreciated using the double-diminishing-balance method and excavator B using the straight-line method. (a) Prepare the journal entry to record the purchase of the excavators, indicating the initial cost of each. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation Apr. 07 Debit Credit
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter7: Property Transactions: Basis, Gain And Loss, And Nontaxable Exchanges
Section: Chapter Questions
Problem 1BD
Related questions
Question
Transcribed Image Text:On April 7, 2024, Crane Corporation purchased two excavators at auction for a combined total cost of $338,000. The excavators were
listed in the auction catalogue at $138,000 for excavator A and $284,000 for excavator B. Immediately after the auction, Crane had
the excavators professionally appraised so it could purchase adequate insurance coverage. The appraisal put a fair value of $112,520
on excavator A and $275,480 on excavator B.
On April 10, Crane paid a total of $4,000 in transportation charges for the two excavators. On April 28, Crane paid $9,000 for
improvements to excavator B and no further expenditures were made for excavator A. On April 30, 2024, both excavators were ready
to be used.
The company expects excavator A to last eight years and to have a residual value of $7,800 when it is removed from service, and it
expects excavator B to be useful for six more years and have a residual value of $19,300 at that time. Due to the different
characteristics of the two excavators, different depreciation methods will be used for them: excavator A will be depreciated using the
double-diminishing-balance method and excavator B using the straight-line method.
(a)
Prepare the journal entry to record the purchase of the excavators, indicating the initial cost of each. (Credit account titles are
automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles
and enter O for the amounts. List all debit entries before credit entries.)
Date Account Titles and Explanation
Apr. 07
Debit
Credit
10
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT