A. A vehicle which cost Rs. 1200,000 had an estimated useful life of 5 years and an estimated residual (salvage) value of Rs. 400,000. Straight-line depreciation was used. Give the entry (in general journal form) required in each of the following alternative assumptions for Easy Corporation: i The vehiele was sold for cash of Rs. 800,000 after 2 years' use. ii. The vehicle was traded in after 3 years on another vehicle with a fair market value of Rs. 1700,000. Trade in allowance was Rs. 850,000. (Record any implied gain or loss) ii. The vehicle was secrapped after 7 years' use. Since scrap dealers were unwilling to pay anything for the vehicle, it was given to a scrap dealer for his services in removing it. B. If there is a considerable proof that the current market value of a building is more than historical cost and that the increasing trend of market value is carrying on, should depreciation continue to be recorded? Elaborate with assumed values.

A. A vehicle which cost Rs. 1200,000 had an estimated useful life of 5 years and an estimated residual (salvage) value of Rs. 400,000. Straight-line depreciation was used. Give the entry (in general journal form) required in each of the following alternative assumptions for Easy Corporation: i The vehiele was sold for cash of Rs. 800,000 after 2 years' use. ii. The vehicle was traded in after 3 years on another vehicle with a fair market value of Rs. 1700,000. Trade in allowance was Rs. 850,000. (Record any implied gain or loss) ii. The vehicle was secrapped after 7 years' use. Since scrap dealers were unwilling to pay anything for the vehicle, it was given to a scrap dealer for his services in removing it. B. If there is a considerable proof that the current market value of a building is more than historical cost and that the increasing trend of market value is carrying on, should depreciation continue to be recorded? Elaborate with assumed values.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 7RE: Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of...

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