Financial Statement Effects Assignment | College Homework Help

w E9-3 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 $40,000. On the date of delivery, January 2, the company paid $10,000 on the machine and signed a $30,000 long-term note payable for the balance. On January 3, it paid $350 transportation cost on the machine. On January 5, O’Connor paid cash for installation costs relating to the machine amounting to $2,400. 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 $4,750. Required: o 19 1. Indicate the effects (accounts, amounts, and for increase, – for decrease) of each transaction (on January 1, 2, 3, and 5) on the accounting equation. 2. Compute the acquisition cost of the machine. 3. Compute the depreciation expense to be reported for the first year. 4. What should be the book value of the machine at the end of the second year? 18 Hint 1: On January 1, only promises are exchanged. Hint 2: Transportation cost and installation cost are necessary costs to acquire the machine Required 1 Required 2 Required 3 Required 4 for increase, – for decrease) of each transaction (on January 1, 2, 3, and 5) on the accounting equation. (Enter any decreases to account Indicate the effects (accounts, amounts, and balances with m uss.) Date Asset Jan 11 Jan 2 – Liabilities – Stockholders’ Equity Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the acquisition cost of the machine. Acquisition Cost ( Required 1 Required 3 > Hint 2: Transportation cost and installation cost are necessary costs to acquire the machine. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the depreciation expense to be reported for the first year. (Do not round intermediate calculations. Depreciation Expense < Required 2 Required 4 > Hint 1: On January 1, only promises are exchanged. Hint 2: Transportation cost and installation cost are necessary costs to acquire the machine. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 What should be the book value of the machine at the end of the second year? (Do not round intermediate calculations.) Book Value ( Required 3 Required