Financial Accounting_Depreciation Accounting

$21.00

Description

Financial Accounting

1. On September 30 of the current year, a
company acquired and placed in service a machine at a cost of $700,000. It has
been estimated that the machine has a service life of five years and a salvage
value of $40,000. Using the double-declining-balance method of depreciation,
prepare a schedule showing depreciation amounts for the current year and the
next 4 years (round answers to the nearest dollar). The company closes its
books on December 31 of each year.

Answer:

Year

Depreciation for the Period

End of Period

Beginning of Period Book Value

Depreciation Rate

Depreciation Expense

Accumulated Depreciation

Book Value

1

2

3

4

5

6

2. A company purchased land with a
building for a total cost of $2,570,000 ($500,000 paid in cash and the balance
on a long-term note). It was estimated that the land and building had market
values of $900,000 and $2,100,000, respectively.

Determine the cost to be apportioned to
the land and to the building and prepare the journal entry to record the
acquisition.

Answer:

Asset Appraised Value Percent of Total Apportioned Cost

Land

Building

Total

Land…………………………

Building……………………..

Cash……………………..

Long-Term
Note Payable.

3. On January 1, a machine costing
$260,000 with a 4-year life and an estimated $5,000 salvage value was
purchased. It was also estimated that the machine would produce 500,000 units
during its life. The actual units produced during its first year of operation
were 110,000. Determine the amount of depreciation expense for the first year
under each of the following assumptions:

1. The company uses the straight-line
method of depreciation.

2. The company uses the
units-of-production method of depreciation.

3. The company uses the
double-declining-balance method of depreciation.

4. A company purchased a truck on October
1 of the current year at a cost of $40,000. The truck is expected to last six
years and has a salvage value of $2,200. The company’s annual accounting period
ends on December 31.

1.
What is the depreciation expense for the current year, assuming the
straight-line method is used?

2. What is the depreciation expense for the
current year, assuming the double-declining-balance method is used?

5. On July 1 of the current year, a
company purchased and placed in service a machine with a cost of $240,000. The
company estimated the machine’s useful life to be four years or 60,000 units of
output with an estimated salvage value of $60,000. During the current year,
15,000 units were produced.

Prepare the necessary December 31
adjusting journal entry to record depreciation for the current year assuming
the company uses:

a. The straight-line method of
depreciation

b. The units-of-production method of depreciation

c. The double-declining balance method of
depreciation

Answer:

a.
Depreciation Expense—Machinery…………………………..

Accumulated Depreciation—Machinery…….:

b.
Depreciation Expense—Machinery…………………

Accumulated Depreciation—Machinery

c.
Depreciation Expense—Machinery…………………

Accumulated
Depreciation—Machinery

Reviews

There are no reviews yet.

Be the first to review “Financial Accounting_Depreciation Accounting”

Your email address will not be published. Required fields are marked *