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ACC 3363 Assignment 1
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ACC 3363 Assignment 1

by Chief OxFebruary 23, 2020

a.

Journal as of 12/31/2009
Depreciation Expense $2,344,444.48
     Accumulated Depreciation ($2,344,444.48)
Equipment $969,000.00
       Cash ($969,000.00)
*Paid for part to increase efficiency

b.

Journal as of 12/31/2009
Depreciation Expense $2,344,444.48
     Accumulated Depreciation ($2,344,444.48)

c.

Journal as of 12/31/2008
Depreciation Expense $1,716,666.67
     Accumulated Depreciation ($1,716,666.67)
Equipment $969,000.00
       Cash ($969,000.00)
*Paid for part to increase efficiency
Journal as of 12/31/2009
Depreciation Expense $2,344,444.48
     Accumulated Depreciation ($2,344,444.48)

d.

Journal as of 12/31/2008
Cash $4,600,000.00
     Accounts Receivable -$4,600,000.00
Depreciation Expense $1,716,666.67
     Accumulated Depreciation ($1,716,666.67)
Equipment $969,000.00
       Cash ($969,000.00)
*Paid for part to increase efficiency
Journal as of 12/31/2009
Depreciation Expense $2,344,444.44
     Accumulated Depreciation ($2,344,444.44)
Cash $5,000,000.00
      Accounts Receivable ($5,000,000.00)

e.

Situation B- The Equipment would be recorded under PP&E (Plant, property, and equipment).

Situation C- The Equipment would be recorded under PP&E (Plant, property, and equipment).

Situation D-  The Equipment would be recorded under Accounts Receivable.

•       The best way to approach this problem is to take the information apart piece by piece.  Once this information is dissected we should then take each step (a), (b), (c), (d) and (e) individually to decide what accounts should be used and how the depreciation should be calculated.  By taking each transaction separately we are able to have a clean slate and not confused as to what should be where.

•       Similarly to how we suggested recording methods in Part I, we will elect one team member to be the “accountant” while the remaining team members act as “management and consultants”.  While the “management and consultants” will give suggestions as to what should go where, ultimately it will be the “accountant’s” decision.  Suggestions will be given for each transaction and the “accountant” will recorded it where everyone agrees upon.


•       Because Release Corporation uses the straight-line depreciation method, we must maintain the same method of depreciation throughout the steps of this problem.  But we must take into consideration the adjustment in life of the equipment from nine years to four years.  This adjustment must be accounted for in the depreciation.  The fact that new technology was released that will make the current equipment obsolete must also be taken into consideration.  Also, when calculating the depreciation we must take into consideration the fair trade value at the current year ($4,600,000 in 2008 and $5,000,000 in 2009).

Also, there must be careful consideration made in regards to where to record the equipment. This is especially true when the company is using the equipment while waiting for an offer or when Release Corp has the equipment marked “held for sale” and the sale falls through.

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Chief Ox

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