Purchase Solution

Pete's Painting Company Cost of Assets Subsequent Book Value

Not what you're looking for?

Ask Custom Question

The following events took place at Pete's Painting Company during 2008:

a. On January 1, Pete bought a used truck for $14,000. He added a tool chest and side racks for ladders for $4,800. The truck is expected to last four years and then be sold for $800. Pete uses straight-line depreciation.
b. On January 1, he purchased several items at an auction for $2,400. The items had fair market values as follows:

10 cases of paint trays and roller covers $200
Storage cabinets 600
Ladders and scaffolding $2,400

Pete will use all of the paint trays and roller covers this year. The storage cabinets are expected to last nine years; the ladders and scaffolding, four years.
c. On February 1, Pete paid the city $1,500 for a three-year license to operate the business.
d. On September 1, Pete sold an old truck for $4,800. The truck had cost $12,000 when it was purchased on September 1, 2003. It had been expected to last eight years and had a salvage value of $800.

1. For each situation, explain the value assigned to the asset when it is purchased [or for (d), the book value when sold].
2. Determine the amount of depreciation or other expense to be recorded for each asset for 2008.
3. How would these assets appear on the balance sheet as of December 31, 2008?

Purchase this Solution
Solution Summary

Tutorial is in excel, attached.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

View More Free Quizzes
Related BrainMass Solutions

  • Reconciliation to GAAP and IAS 16

    Subsequent to initial recognition, assets may be carried either at cost less accumulated depreciation and any impairment losses (benchmark treatment) or at a revalued amount equal to fair value at the date of the revaluation less any subsequent accumulated

  • Accounting - Plastics Company, Pete's Pest Control

    Retained earnings Answer: Assets: Assets are everything of value that is owned by a person or company. The balance sheet of a firm records the monetary value of the assets owned by the firm.

  • analysis, ratios, solvency, finance issues

    365598 Practice Problems Problem 8-6 Cost of Assets, Subsequent Book Values and Balance Sheet preparation The following events took place at Pete's Painting Company during 2008. a. On January 1, Pete bought a used truck for $14,000.

  • Crystal, Incorporated: Acquisition Cost, Goodwill

    Based on the information given above, the excess of Crystal's acquisition cost over the book value of Design's net assets is: Guidance: FV of assets acquired $440,000 Fair value of consideration given $410,000 (acquisition cost) $410,000 - $440,000

  • Accounting-Wilmington, Inc.

    NUMBER OF TRAINEES 9. insuring all tangible fixed assets. MARKET VALUE OR BOOK VALUE OF ASSETS TO BE INSURED 10. supervising production. NUMBER OF EMPLOYEES, DIRECT LABOR HOURS 11. maintaining and repairing machinery and equipment.

  • Eliminating Entries with Negative Goodwill and Push-Down Accounting

    The book value of Cogner's assets and liabilities approximated their fair vales, except for land, which had a book value of $80,000 and a fair value of $100,000, and buildings, which had a book value of $220,000 and a fair value of $400,000.

  • Parent Company Entries Three Methods

    for the four years., assuming that any excess of purchase price over equity acquired was attributable solely to an excess of market over book values of depreciable assets (with a remaining life of 15 years) Assume straight line depreciation.

  • Capitalized Assets Costs for Depreciation

    Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value. 2.

  • Investment Activities and Income

    Accounting for trading securities subsequent to acquisition require marking to market which means that at the end of the accounting period the investor company adjusts the book value of the investment to reflect its current market value.

View More Related Solutions