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question your business purchased 4 custom made pieces of equipment 12 000 each with 4278355


Your business purchased 4 custom made pieces of equipment @$12,000 each with an estimated 4 year life and no residual value.One will be used by the company, and you believe you will get mostof the benefit at the beginning of its life. The second piece ofequipment will be used on your magic carpet research anddevelopment (R&D) project, and it has not been determined if itcan be used on other R&D projects in the future. Immediatelyafter the purchase it was determined that there was a high demandfor the remaining two pieces of equipment, so you listed them inyour sales catalog at $25,000 each.

What are the 3 accounting issues that would apply to thispurchase.

Do you have all the information to complete this financialtransaction, if not, what questions do you need to ask, and how dothey affect the treatment.

For each situation, how would this financial transaction appearon the income statement and balance sheet.


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