Question

Berlin sells construction materials. On 1/1/2018, Berlin uses cash to purchase a forklift for $50,000. The forklift comes from china, so Berlin has to pay a 20% tariff, which is whack but also an actual thing that is happening right now. Berlin estimates no salvage value at the end of the forklift’s 15 years expected life. USE STRAIGHT LINE METHOD.

Also, on 1/1/2018, Berlin purchases a patent for $500,000 that has 5 years until expiration.

1. Record the JE for the purchase of the machine on 1/1/2018
2. Record the JE for the purchases of the patent on 1/1/2018
3. Record the separate AJE’s to account for the depreciation and amortization on 12/31/2018
4. On 1/1/19. Berlin sells the patent for $350,000 cash. Record the JE for the transaction
5. On 1/1/19 Berlin decides to after the depreciation assumptions on the forklift. He anticipates it will only last for 11 years in total but will be worth $6,000 at the end of its life. Record the depreciation.

Answer 1