9-7: Brainiac Company purchased a delivery truck for $30,000 on January 1, 2011.The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2011 and 12,000 in 2012.
(a) Compute depreciation expense for 2011 and 2012 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining balance method.
(b) Assume that Brainiac uses the straight-line method.
(1) Prepare the journal entry to record 2011 depreciation.
(2) Show how the truck would be reported in the December 31, 2011, balance sheet
E9-12: The following are selected 2011 transactions of Franco Corporation.
Jan. 1 purchased a small company and recorded goodwill of $150,000. Its useful life is indefinite. May 1 purchased for $90,000 a patent with an estimated useful life of 5 years and a legal life of 20 years.
Prepare necessary adjusting entries at December 31 to record amortization required by the events above.