b. Accumulated Depreciation: The company has only one plant asset (truck) that it purchased at the start of this year. That asset had cost $56,000, had an estimated life of five years, and is expected to have zero value at the end of the five years. The company uses straight line depreciation method to calculate its depreciation. Accumulated depreciation -Truck Debit or Credit? Step 1: Determine what the current account balance equals. 24 1 Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. c. Accumulated Depreciation: The company has only one plant asset (equipment) that it purchased at the start of this year. That asset had cost $56,000, had an estimated life of seven years, and is expected to be valued at $11,200 at the end of the seven years. The company uses straight line depreciation method to calculate its depreciation. Accumulated depreciation -Equipment Step 1: Determine what the current account balance equals. Debit or Credit? Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adiusting entry to get from step 1 to sten 2

b. Accumulated Depreciation: The company has only one plant asset (truck) that it purchased at the start of this year. That asset had cost $56,000, had an estimated life of five years, and is expected to have zero value at the end of the five years. The company uses straight line depreciation method to calculate its depreciation. Accumulated depreciation -Truck Debit or Credit? Step 1: Determine what the current account balance equals. 24 1 Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. c. Accumulated Depreciation: The company has only one plant asset (equipment) that it purchased at the start of this year. That asset had cost $56,000, had an estimated life of seven years, and is expected to be valued at $11,200 at the end of the seven years. The company uses straight line depreciation method to calculate its depreciation. Accumulated depreciation -Equipment Step 1: Determine what the current account balance equals. Debit or Credit? Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adiusting entry to get from step 1 to sten 2

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter19: Accounting For Plant Assets, Depreciation, And Intangible Assets

Section19.2: Calculating Depreciation Expense

Problem 1OYO

See similar textbooks

Similar questions

A machine with a 4-year estimated useful life and an estimated 15% residual value was acquired on January 1. Would depreciation expense using the sum-of-the-years-digits method be higher or lower than depreciation expense using the double-declining balance method in the first and second years:
Use the information in Problem A-1 to solve this problem. Required Prepare a schedule of depreciation using the double-declining-balance method. PROBLEM A-1 A delivery van was bought for 18,000. The estimated life of the van is four years. The trade-in value at the end of four years is estimated to be 2,000. Check Figure Year 2 depreciation, 4,500
Albany Corporation purchased equipment at the beginning of Year 1 for 75,000. The asset does not have a residual value and is estimated to be in service for 8 years. Calculate the depreciation expense for Years 1 and 2 using the double-declining-balance method. Round to the nearest dollar.
Consider the following situations and determine (1) which type of liability should be recognized (specific account), and (2) how much should be recognized in the current period (year). A. A business depreciates a building with a book value of $12,000, using straight-line depreciation, no salvage value, and a remaining useful life of six years. B. An organization has a line of credit with a supplier. The company purchases $35,500 worth of inventory on credit. Terms of purchase are 3/20, n/60. C. An employee earns $1,000 in pay and the employer withholds $46 for federal income tax. D. A customer pays $4,000 in advance for legal services. The lawyer has previously recognized 30% of the services as revenue. The remainder is outstanding.
Roxannes Delightful Candies, Inc. began the year with a retained earnings balance of $45,000. The company had a great year and earned a net income of $80,000. However, the companys controller determined that it had made an error when calculating depreciation in the preceding year, resulting in an understated depreciation expense amount of $2,000. What is the ending retained earnings balance?
Revising depreciation estimates Hard Bodies Co. is a fitness chain that has just completed its second year of operations. At the beginning of its first fiscal year, the company purchased fitness equipment at a cost of 600,000 and estimated that the equipment would have a useful life of five years and no residual value. The company uses the straight-line depreciation method. The company reported net income for the first two years of operations as follows: Mike Gambit, the companys chief financial officer (CFO), has recently run financial models to predict future net income, and he expects net losses to continue at (2,000) per year for the next three years. James Steed, the president of Hard Bodies, is concerned about these predictions, as he is under pressure from the companys owner to return the company to Year 1 net income levels. If the company does not meet these goals, both he and Mike will likely be fired. Mike suggests that the company change the estimated useful life of the fitness equipment to 10 years and increase the equipments estimated residual value to 50,000. This will reduce depreciation expense and increase net income. 1. Evaluate the decision to change the equipments estimated useful life and estimated residual value to improve earnings. How does this change impact the usefulness of the companys net income for external decision makers? 2. If Mike and James make the change, are they acting in an ethical manner? Explain.
Stem Corp. bought a machine in February of year 7 for 20,000. Then Stem bought furniture in November of year 7 for 30,000. Both machines were placed in service for business purposes immediately after purchase. No other assets were purchased during year 7. What depreciation convention must Stem use for the machine purchased in February year 7? a. Mid-month b. Half-year c. Mid-quarter d. Full-year