nd of Chapter Problem 14.5 On 2 January 2015, Powerhouse Ltd

nd of Chapter Problem 14.5
On 2 January 2015, Powerhouse Ltd purchased, by exchanging $240,000 cash and a $144,000,
12%, 18-month finance company loan, assets with the following independently determined
appraised values:
Appraised
value
Building $320,000
Land 80,000
Machinery and
equipment 100,000
$500,000
The estimated useful life of the building is 30 years and its residual value is $16,000. The
$100,000 machinery and equipment amount consists of three machines independently valued
at $30,000 each and some office equipment valued at $10,000. The estimated useful lives and
residual values for these assets are:
Useful
life
Residual
value
Machine 1 6 years $3,600
Machine 2 9 years 3,600
Machine 3 4 years 4,800
Office
equipment 5 years 400
Powerhouse Ltd uses the straight-line depreciation method. Ignore GST.
A.
Prepare journal entries (in general journal form) to record the following. (Enter all debit
entries first, followed by all credit entries. Credit account titles are automatically
indented when the amount is entered. Do not indent manually. Round answers to 0
decimal places, e.g. 5,275.)
1. The purchase of the assets.
Powerhouse Ltd
General journal (extract)
Date Particulars Debit Credit
2015
Jan.
2 Building 245760
Land 61440
Machinery 69120
Office equipment 7680