cted to havee a five year Me, with a esidu valu of S6500 wn the and of tive Jsing the double-declining balance method, depreciation expense for 2022 (the second full year) would be (Do net round your intermediate calculatiun Mutple Chole $31,000 $17,016 O $18,600 $28,360
Q: (Pvt.) Ltd. is a manufacturing company. At 30-06-2021 the Company had a closing stock in trade, cost…
A: Valuation of Inventory as per accounting standard
Q: A company reports the following beginning inventory and two purchases for the month of January. On…
A: Under LIFO Method, using perpetual inventory system, value of ending inventory is calculated on the…
Q: displayed below.] Ramirez Company installs a computerized manufacturing machine in its factory at…
A: Under straight method the depreciation is uniform for all years. Computation of depreciation per…
Q: Recently,two friends in Australia combined their monetary resources and formed a business.Regardless…
A: Accounting concepts establish the assumptions that are used to create financial statements for a…
Q: B. Transaction effects on the Basic Accounting Equation. For each transaction, indicate whether the…
A: Accounting equation is, Total Assets = Total Liabilities + Total owner's equity Every transaction…
Q: E. On May 30, 2012 a lady manufacturing engineer loaned $ 15,000 in the bank for the expansion of…
A: The question is based on the concept of Financial Accounting.
Q: Cost data for Disksan Manufacturing Company for the month ended January 31 are as follows:…
A: Cost sheet is a method of allocating total cost into different categories. It helps to identify the…
Q: Which of the following best describes an application of the entity concept?
A: The business entity concept states that the transactions associated with a business must be…
Q: uired information following information applies to the questions displayed below.] n rented his…
A: Itemized deductions refer to the type of expense that can be subtracted from the total income earned…
Q: On July 1, 2021, ABC Co. borrowed P1,000,000 and issued a one-year note payable. The lender…
A: According to this question, we prepare the journal entries with reference to the given scenarios.…
Q: Selected current year-end financial statements of GENESIS Corporation follow. All sales were on…
A: In order to compute current assets all the assets are currents assets except plant assets Current…
Q: A company purchased $3,200 of merchandise on July 5 with terms 1/10, n/30. On July 7, it returned…
A: Discount of 1% is valid for 10 days from the date of purchase. So the discount is valid till July…
Q: Suppose the market interest rate is 5%. Valuate the following bonds. (i) a 3-year discount bond with…
A: Valuation of Bond
Q: Required information Learning Objective 11-04 Calculate the periodic amortization intangible asset.…
A: Amortization is an accounting approach for lowering the book value of a loan or intangible asset…
Q: "he following information applies to the questions displayed below.] n January 1, 2024, Splash City…
A: Amortization Schedule A loan amortization schedule is a comprehensive table of periodic loan…
Q: Your aunt, who lives in Royal Oak decides to buy a new, American made dress. In GDP accounting this…
A: GDP accounting is the accounting which is used by government to see the income which is earned by…
Q: following cash payments Maintenance expense oftice supplies Transportation expense $24.90 33.20 16.0…
A: Revenue-Expenses=Net Income
Q: Homework created question Save You want to purchase a new car for a price of $31,250. Your finance…
A: The question is based on the concept of Financial Management.
Q: Question 42 When the Fed purchases government securities, it Question 42 options: a)…
A: Government securities are government borrowing financings that are used to fund everyday activities…
Q: Donald Electronics an electronics repair shop, prepared the unadjusted trial balance at the end of…
A: A balance sheet is a financial statement that shows the assets, liabilities, and shareholder equity…
Q: Two online travel companies, E-Travel and Pricecheck, provide the following selected financial…
A: Solution:- 1-a)Calculation of the debt to equity ratio for E-Travel and Price check as follows…
Q: Which of the following is not an example of control procedures over accounts receivable?…
A: Option A is the answer Analysis B) Sending monthly statements to customer who take a credit: Where…
Q: Ahmad is among 700 workers employed by ABC Construction Co. Ltd. at Klang, Selangor. He sought your…
A: A strike means a collaborative action that results in a suspension of work, a refusal to work, or a…
Q: Calculate for Fred the correct amount of employment remuneration that he should include on his tax…
A: Employment remuneration is the amount of money which has been received by the employee for the work…
Q: Cala Manufacturing purchases land for $297,000 as part of its plans to build a new plant. The…
A: A Journal entry is a primary entry that records the financial transactions initially. The…
Q: 25. Calculate the amount of corporate income tax due and the net income after taxes (in $) for the…
A: Formula: Net income after taxes = Taxable income - Tax liability
Q: 1- The small capital base of banks makes them sensitive to negative earn True False
A: Basic Concept of Banking
Q: On January 1, 2019, Jericho Company purchased a patent for P7,140,000. The patent is being amortized…
A: Answer is option B) 4,896,000
Q: an employer is competitive in the labour market: It has to pay at least the going wage. The wage…
A: Market A market refers to the place where buying and selling activities of goods, products, or…
Q: J, a partner of a general professional partnership, showed the following income and losses: Net…
A: Partnership refers to the contractual arrangement among the people or individuals who carry out the…
Q: PROBLEM 4: MULTIPLE CHOICE-COMPUTATIONAL 1. In preparing its August 31, 2004 bank reconciliation,…
A: "Since you have asked multiple questions, we will solve first question for you. If you want any…
Q: Safety regulations are superior when an Injurer can escape paying damages by filing bankruptcy. True…
A: Bankruptcy Bankruptcy refers to the legal process where people who become insolvent or are not able…
Q: Compare option valuation with stock and bond valuation
A: Stock Valuation is the procedure of determining the current worth of stock at a particular period of…
Q: Corporation specializes in the sale of printing
A: Purchase discount is also called as cash discount which is given by the saler for…
Q: Ali Co., a publicly traded company, has prepared its income statement for the year ending December…
A:
Q: The trust for Ardolio, Inc. prepares a statement of affairs which shows that unsecured creditors…
A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Southern Style Realty has total assets of $485,390, net fixed assets of $250,000, current…
A: Formula: Total debt ratio = Total debts / Total Assets
Q: If the company uses absorption costing ,variable costing and super-variable costing What is the…
A: The income statement is prepared to record the revenue and expenses for the period and find the net…
Q: Journal entries? Jackson Invested $ 250000 in to Electronics shop as capital Paid salaries to…
A: There are three golden rules in accounting for recording the transaction : Debit what comes in ,…
Q: Required: 1) Given the different market interest rates below, calculate the following items.…
A: A bond is selling at a discount if its selling price is less than its face value and will be trading…
Q: Donald Electronics an electronics repair shop, prepared the unadjusted trial balance at the end of…
A: Statement of Owner's Equity - Statement of owner's equity includes amount contributed by the owner…
Q: d the local tax
A: Below information Given, taxable income of $7,060,373. In this question, we will find out the Tax…
Q: 4. Compared to straight-line depreciation, does accelerated depreciation result in payment of less…
A: Accelerated Method of Depreciation: This method of depreciation allows the owner of the asset to…
Q: Ayayai Inc., a greeting card company, had the following statements prepared as of December 31, 2020.…
A: The cash flow statement is prepared to record cash flow from various activities during the period…
Q: Lana, a single individual, was looking for an investment that would give some diversity to her stock…
A: Shares: Shares are the number of units held by a company as its stock. It is segregated into two…
Q: (AICPA Adapted) M the beginning of the eurrent vear, Ceve Compan, donely-held entity, iaued ON bonde…
A: When stock is issued along with other security (lump sum sales), the proceeds can be allocated by…
Q: A select life aged 40 purchases a 10-year endowment insurance with $100,000 sum insured. Premiums…
A: An 10 years endowment insurance pays the sum assured benefit to the nominee in case the insurer died…
Q: Diving Wear Ltd makes neoprene wetsuits. The company’s projected income statement for the coming…
A: Income statement is a part of the financial statements of a company. It shows the revenues earned…
Q: ABC Store. has budgeted sales for June and July at $690,000 and $720,000, respectively. Sales are…
A: July Cash sale = $690,000 x 10% = $69,000 July Credit sale = $690,000 x 90% = $621,000
Q: Diego Company paid $186,000 cash to acquire a group of items consisting of land appraised at $53,000…
A: When numerous assets are purchased for a single price, this is known as a lump-sum buy. Each of the…
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Step by step
Solved in 2 steps
- Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated life: 5 years Estimated residual value: 3,000 Depreciation method for financial statements: straight-line method Depreciation for income tax purposes: MACRS (3-year life) From 2019 through 2023, each year, Hunter had sales of 100,000, cost of goods sold of 60,000, and operating expenses (excluding depreciation) of 15,000. The truck was disposed of on December 31, 2023, for 2,000. Required: 1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2019 through 2023. 2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2019 through 2023. 3. Compare the total income for all 5 years under Requirements 1 and 2.At the beginning of 2020, Holden Companys controller asked you to prepare correcting entries for the following three situations: 1. Machine X was purchased for 100,000 on January 1, 2015. Straight-line depreciation has been recorded for 5 years, and the Accumulated Depreciation account has a balance of 45,000. The estimated residual value remains at 10,000, but the service life is now estimated to be 1 year longer than originally estimated. 2. Machine Y was purchased for 40,000 on January 1, 2018. It had an estimated residual value of 4,000 and an estimated service life of 8 years. It has been depreciated under the sum-of-the-years-digits method for 2 years. Now, the company has decided to change to the straight-line method. 3. Machine Z was purchased for 80,000 on January 1, 2019. Double-declining-balance depreciation has been recorded for 1 year. The estimated residual value is 8,000 and the estimated service life is 5 years. The computation of the depreciation erroneously included the estimated residual value. Required: Prepare any necessary correcting journal entries for each situation. Also prepare the journal entry for each situation to record the depreciation for 2020. Ignore income taxes.
- On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was estimated at 2,000. The equipment will be depreciated over 10 years using the double-declining balance method. Counting the year of acquisition as one-half year, Mundo should record 2019 depredation expense of: a. 7,680 b. 9,000 c. 9,600 d. 10,000Hathaway Company purchased a copying machine for 8,700 on October 1, 2019. The machines residual value was 500 and its expected service life was 5 years. Hathaway computes depreciation expense to the nearest whole month. Required: 1. Compute depredation expense (rounded to the nearest dollar) for 2019 and 2020 using the: a. straight-line method b. sum-of-the-years-digits method c. double-declining-balance method 2. Next Level Which method produces the highest book value at the end of 2020? 3. Next Level Which method produces the highest charge to income in 2020? 4. Next Level Over the life of the asset, which method produces the greatest amount of depreciation expense?During 2019, Ryel Companys controller asked you to prepare correcting journal entries for the following three situations: 1. Machine A was purchased for 50,000 on January 1, 2014. Straight-line depreciation has been recorded for 5 years, and the Accumulated Depreciation account has a balance of 25,000. The estimated residual value remains at 5,000, but the service life is now estimated to be 1 year longer than estimated originally. 2. Machine B was purchased for 40,000 on January 1, 2017. It had an estimated residual value of 5,000 and an estimated service life of 10 years. it has been depreciated under the double-declining-balance method for 2 years. Now, at the beginning of the third year, Ryel has decided to change to the straight-line method. 3. Machine C was purchased for 20,000 on January 1, 2018, Double-declining-balance depreciation has been recorded for 1 year. The estimated residual value of the machine is 2,000 and the estimated service life is 5 years. The computation of the depreciation erroneously included the estimated residual value. Required: Prepare any necessary correcting journal entries for each situation. Also prepare the journal entry necessary for each situation to record depreciation expense for 2019.
- Depreciation Methods Sorter Company purchased equipment for 200,000 on January 2, 2019. The equipment has an estimated service life of 8 years and an estimated residual value of 20,000. Required: Compute the depreciation expense for 2019 under each of the following methods: 1. straight-line 2. sum-of-the-years-digits 3. double-declining-balance 4. Next Level What effect does the depreciation of the equipment have on the analysis of rate of return?On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.
- Depreciation Methods On January 1, 2019, Loeffler Company acquired a machine at a cost of $200,000. Loeffler estimates that it will use the machine for 4 years or 8,000 machine hours. It estimates that after 4 years the machine can be sold for $20,000. Loeffler uses the machine for 2,100 and 1,800 machine hours in 2019 and 2020, respectively. Required: Compute depreciation expense for 2019 and 2020 using the (1) straight-line, (2) double-declining-balance, and (3) units-of-production methods of depreciation.Dinnell Company owns the following assets: In the year of acquisition and retirement of an asset, Dinnell records depreciation expense for one-half year. During 2020, Asset A was sold for 7,000. Required: Prepare the journal entries to record depreciation on each asset for 2017 through 2020 and the sale of Asset A. Round all answers to the nearest dollar.Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.