Cadillac Construction Company uses the retirement method to determine depreciation on its small tools. During 2019, the first year of the company’s operations, tools were purchased at a cost of $8,000. In 2021, tools originally costing $2,000 were sold for $250 and replaced with new tools costing $2,500.Required:1. Prepare journal entries to record each of the above transactions.2. Repeat requirement 1 assuming that the company uses the replacement depreciation method instead of the retirement method.
Cadillac Construction Company uses the retirement method to determine depreciation on its small tools. During 2019, the first year of the company’s operations, tools were purchased at a cost of $8,000. In 2021, tools originally costing $2,000 were sold for $250 and replaced with new tools costing $2,500.Required:1. Prepare journal entries to record each of the above transactions.2. Repeat requirement 1 assuming that the company uses the replacement depreciation method instead of the retirement method.
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
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 7P: Dinnell Company owns the following assets: In the year of acquisition and retirement of an asset,...
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Cadillac Construction Company uses the retirement method to determine
Required:
1. Prepare
2. Repeat requirement 1 assuming that the company uses the replacement depreciation method instead of the retirement method.
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