Acct1240 Applied Financial Accounting

A customer list from MTC Transport was purchased by SL on September 1 for $75,000 cash. It is expected that the list will generate revenues for the next six years. • SL has internally developed a strong customer list of its own. The owner, Sven, has stated that this list is worth about $220,000 if sold. • A warehouse terminal and land in the Kawartha area was purchased on November 1 for $750,000 cash. The land is valued at $600,000 and the terminal at $150,000. SL depreciates terminals at 6% per year using the declining balance method. • SL has an administrative building just west of Ottawa that is recorded on its books at $800,000. The building was purchased five years ago and has been depreciated over 20 years. On December 31, it was determined that there was a major soil issue around the building, which will make it difficult to sell. It is estimated that the building’s fair value and value in use is now 30% of its original cost, with an estimated $40,000 in costs to sell.
Additional information:
• SL records its depreciation to the nearest month. In other words, an asset purchased October 1 would have its depreciation prorated (3/12ths). • No entries have been made to reflect any of the transactions above. • Prime is currently at 2%.
Required Prepare journal entries, with supporting documentation, for the issues above. State any assumptions that you make.