Exercise 9

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E9-6 Determine depreciation for partial periods Rottino Company purchased a new machine on October 1, 2022, at a cost of $150,000. The company estimated that the machine will have a salvage value of $12,000. The machine is expected to be used for 10,000 working hours during its 5-year life. Instructions Compute the depreciation expense under the following methods for the year indicated. (a) Straight-line for 2022. (b) Units-of-activity for 2022, assuming machine usage was 1,700 hours. (c) Declining-balance using double the straight-line rate for 2022 and 2023. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells w (a) Straight-line method Cost $150,000 Less: Salvage value $12,000 Depreciable cost $138,000 Useful life (years) 5 Annual depreciation $27,600 2022 Depreciation: Annual Depreciation $27,600 Months machine in use 3 2022 partial year depreciation $6,900 (b) Units-of-activity method Cost $150,000 Less: Salvage value $12,000 Depreciable cost $138,000 Useful life (hours) 10,000 Depreciable cost/hour $13.80 2022 Depreciation: Depreciable cost/hour $13.80 Hours machine used 1,700 2022 depreciation expense $23,460 (c) Declining-balance method: Straight-line rate 20% Double the straight-line rate 40%

2022 Depreciation: Cost $150,000 Double the straight-line rate 40% 2022 full year depreciation $60,000 Number of months in use 3 2022 partial year depreciation $15,000 2023 Depreciation: Cost $150,000 Less: accumulated depreciation, 2022 $15,000 Ending book value, 2022 $135,000 Beginning book value, 2023 $135,000 Double the straight-line rate 40% 2023 depreciation expense $54,000 After you have completed the requirements of E9-6, consider the additional questions. 1 Assume the cost of the asset changed to $180,000. Recompute straight-line depreciation 2 Assume that the cost of the asset changed to $180,000 and the machine usage for 2022 changed to 2,100 hours. Recompute 2022 depreciation using the units-of-activity metho 3. Assume that the cost of the asset changed to $180,000. Recompute 2022 and 2023 declin depreciation using double the straight line rate.

with a "?" .

n for 2022. od. ning-balance

P9-5A Journalize a series of equipment transactions related to purchase, sale, retirement, and depr At December 31, 2022, Arnold Company reported the following as plant assets. Land $3,000,000 Buildings $26,500,000 Less: Accumulated depreciation - buildings 11,925,000 14,575,000 Equipment 40,000,000 Less: Accumulated depreciation - equipment 5,000,000 35,000,000 Total plant assets 52,575,000 During 2023, the following selected cash transactions occurred. April 1 Purchased land for $2,200,000. May 1 Sold equipment that cost $600,000 when purchased on January 1, 2016. The equipment was sold for $170,000. June 1 Sold land for $1,600,000. The land cost $1,000,000. July 1 Purchased equipment for $1,100,000. Dec. 31 Retired equipment that cost $700,000 when purchased on December 31, 2013. No salva Instructions (a) then post 2023 transactions.) Arnold uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 40-year life and no salvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement. (b) Record adjusting entries for depreciation for 2023. (c) Prepare the plant assets section of Arnold's balance sheet at December 31, 2023. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells wit (a) April 1 Account Value Account Value May 1 Account Value Account Value May 1 Account Value Account Value Account Value Journalize the above transactions. ( Hint: You may wish to set up T-accounts, post beginn

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