Depreciation by Two Methods; Sale of Fixed Asset New tire retreading equipment, acquired at a cost of $625,000 on September 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $53,700. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected. In the first week of the fifth year, on September 6, the equipment was sold for $91,500. Required: 1. Determine the annual depreciation expense for each of the estimated four years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the following methods: a. Straight-line method Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 1 $fill in the blank 45f9c5fa9ffcfe6_1 $fill in the blank 45f9c5fa9ffcfe6_2 $fill in the blank 45f9c5fa9ffcfe6_3 2 $fill in the blank 45f9c5fa9ffcfe6_4 $fill in the blank 45f9c5fa9ffcfe6_5 $fill in the blank 45f9c5fa9ffcfe6_6 3 $fill in the blank 45f9c5fa9ffcfe6_7 $fill in the blank 45f9c5fa9ffcfe6_8 $fill in the blank 45f9c5fa9ffcfe6_9 4 $fill in the blank 45f9c5fa9ffcfe6_10 $fill in the blank 45f9c5fa9ffcfe6_11 $fill in the blank 45f9c5fa9ffcfe6_12 5 $fill in the blank 45f9c5fa9ffcfe6_13 $fill in the blank 45f9c5fa9ffcfe6_14 $fill in the blank 45f9c5fa9ffcfe6_15 b. Double-declining-balance method Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 1 $fill in the blank 45f9c5fa9ffcfe6_16 $fill in the blank 45f9c5fa9ffcfe6_17 $fill in the blank 45f9c5fa9ffcfe6_18 2 $fill in the blank 45f9c5fa9ffcfe6_19 $fill in the blank 45f9c5fa9ffcfe6_20 $fill in the blank 45f9c5fa9ffcfe6_21 3 $fill in the blank 45f9c5fa9ffcfe6_22 $fill in the blank 45f9c5fa9ffcfe6_23 $fill in the blank 45f9c5fa9ffcfe6_24 4 $fill in the blank 45f9c5fa9ffcfe6_25 $fill in the blank 45f9c5fa9ffcfe6_26 $fill in the blank 45f9c5fa9ffcfe6_27 5 $fill in the blank 45f9c5fa9ffcfe6_28 $fill in the blank 45f9c5fa9ffcfe6_29 $fill in the blank 45f9c5fa9ffcfe6_30 2. Journalize the entry to record the sale, assuming double-declining-balance method is used. If an amount box does not require an entry, leave it blank. fill in the blank 49cd0dfe102dffe_2 fill in the blank 49cd0dfe102dffe_3 fill in the blank 49cd0dfe102dffe_5 fill in the blank 49cd0dfe102dffe_6 fill in the blank 49cd0dfe102dffe_8 fill in the blank 49cd0dfe102dffe_9 fill in the blank 49cd0dfe102dffe_11 fill in the blank 49cd0dfe102dffe_12 3. Journalize the entry to record the sale in (2), assuming that the equipment was sold for $78,600 instead of $91,500. If an amount box does not require an entry, leave it blank. fill in the blank 958465fc507407c_2 fill in the blank 958465fc507407c_3 fill in the blank 958465fc507407c_5 fill in the blank 958465fc507407c_6 fill in the blank 958465fc507407c_8 fill in the blank 958465fc507407c_9 fill in the blank 958465fc507407c_11 fill in the blank 958465fc507407c_12
Depreciation by Two Methods; Sale of Fixed Asset New tire retreading equipment, acquired at a cost of $625,000 on September 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $53,700. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected. In the first week of the fifth year, on September 6, the equipment was sold for $91,500. Required: 1. Determine the annual depreciation expense for each of the estimated four years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the following methods: a. Straight-line method Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 1 $fill in the blank 45f9c5fa9ffcfe6_1 $fill in the blank 45f9c5fa9ffcfe6_2 $fill in the blank 45f9c5fa9ffcfe6_3 2 $fill in the blank 45f9c5fa9ffcfe6_4 $fill in the blank 45f9c5fa9ffcfe6_5 $fill in the blank 45f9c5fa9ffcfe6_6 3 $fill in the blank 45f9c5fa9ffcfe6_7 $fill in the blank 45f9c5fa9ffcfe6_8 $fill in the blank 45f9c5fa9ffcfe6_9 4 $fill in the blank 45f9c5fa9ffcfe6_10 $fill in the blank 45f9c5fa9ffcfe6_11 $fill in the blank 45f9c5fa9ffcfe6_12 5 $fill in the blank 45f9c5fa9ffcfe6_13 $fill in the blank 45f9c5fa9ffcfe6_14 $fill in the blank 45f9c5fa9ffcfe6_15 b. Double-declining-balance method Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 1 $fill in the blank 45f9c5fa9ffcfe6_16 $fill in the blank 45f9c5fa9ffcfe6_17 $fill in the blank 45f9c5fa9ffcfe6_18 2 $fill in the blank 45f9c5fa9ffcfe6_19 $fill in the blank 45f9c5fa9ffcfe6_20 $fill in the blank 45f9c5fa9ffcfe6_21 3 $fill in the blank 45f9c5fa9ffcfe6_22 $fill in the blank 45f9c5fa9ffcfe6_23 $fill in the blank 45f9c5fa9ffcfe6_24 4 $fill in the blank 45f9c5fa9ffcfe6_25 $fill in the blank 45f9c5fa9ffcfe6_26 $fill in the blank 45f9c5fa9ffcfe6_27 5 $fill in the blank 45f9c5fa9ffcfe6_28 $fill in the blank 45f9c5fa9ffcfe6_29 $fill in the blank 45f9c5fa9ffcfe6_30 2. Journalize the entry to record the sale, assuming double-declining-balance method is used. If an amount box does not require an entry, leave it blank. fill in the blank 49cd0dfe102dffe_2 fill in the blank 49cd0dfe102dffe_3 fill in the blank 49cd0dfe102dffe_5 fill in the blank 49cd0dfe102dffe_6 fill in the blank 49cd0dfe102dffe_8 fill in the blank 49cd0dfe102dffe_9 fill in the blank 49cd0dfe102dffe_11 fill in the blank 49cd0dfe102dffe_12 3. Journalize the entry to record the sale in (2), assuming that the equipment was sold for $78,600 instead of $91,500. If an amount box does not require an entry, leave it blank. fill in the blank 958465fc507407c_2 fill in the blank 958465fc507407c_3 fill in the blank 958465fc507407c_5 fill in the blank 958465fc507407c_6 fill in the blank 958465fc507407c_8 fill in the blank 958465fc507407c_9 fill in the blank 958465fc507407c_11 fill in the blank 958465fc507407c_12
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 79.1C
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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.
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New tire retreading equipment, acquired at a cost of $625,000 on September 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $53,700. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected.
In the first week of the fifth year, on September 6, the equipment was sold for $91,500.
Required:
1. Determine the annual depreciation expense for each of the estimated four years of use, the
a. Straight-line method
| Year | Depreciation Expense |
Accumulated Depreciation, End of Year |
Book Value, End of Year |
| 1 | $fill in the blank 45f9c5fa9ffcfe6_1 | $fill in the blank 45f9c5fa9ffcfe6_2 | $fill in the blank 45f9c5fa9ffcfe6_3 |
| 2 | $fill in the blank 45f9c5fa9ffcfe6_4 | $fill in the blank 45f9c5fa9ffcfe6_5 | $fill in the blank 45f9c5fa9ffcfe6_6 |
| 3 | $fill in the blank 45f9c5fa9ffcfe6_7 | $fill in the blank 45f9c5fa9ffcfe6_8 | $fill in the blank 45f9c5fa9ffcfe6_9 |
| 4 | $fill in the blank 45f9c5fa9ffcfe6_10 | $fill in the blank 45f9c5fa9ffcfe6_11 | $fill in the blank 45f9c5fa9ffcfe6_12 |
| 5 | $fill in the blank 45f9c5fa9ffcfe6_13 | $fill in the blank 45f9c5fa9ffcfe6_14 | $fill in the blank 45f9c5fa9ffcfe6_15 |
b. Double-declining-balance method
| Year | Depreciation Expense |
Accumulated Depreciation, End of Year |
Book Value, End of Year |
| 1 | $fill in the blank 45f9c5fa9ffcfe6_16 | $fill in the blank 45f9c5fa9ffcfe6_17 | $fill in the blank 45f9c5fa9ffcfe6_18 |
| 2 | $fill in the blank 45f9c5fa9ffcfe6_19 | $fill in the blank 45f9c5fa9ffcfe6_20 | $fill in the blank 45f9c5fa9ffcfe6_21 |
| 3 | $fill in the blank 45f9c5fa9ffcfe6_22 | $fill in the blank 45f9c5fa9ffcfe6_23 | $fill in the blank 45f9c5fa9ffcfe6_24 |
| 4 | $fill in the blank 45f9c5fa9ffcfe6_25 | $fill in the blank 45f9c5fa9ffcfe6_26 | $fill in the blank 45f9c5fa9ffcfe6_27 |
| 5 | $fill in the blank 45f9c5fa9ffcfe6_28 | $fill in the blank 45f9c5fa9ffcfe6_29 | $fill in the blank 45f9c5fa9ffcfe6_30 |
2.
| fill in the blank 49cd0dfe102dffe_2 | fill in the blank 49cd0dfe102dffe_3 | ||
| fill in the blank 49cd0dfe102dffe_5 | fill in the blank 49cd0dfe102dffe_6 | ||
| fill in the blank 49cd0dfe102dffe_8 | fill in the blank 49cd0dfe102dffe_9 | ||
| fill in the blank 49cd0dfe102dffe_11 | fill in the blank 49cd0dfe102dffe_12 |
3. Journalize the entry to record the sale in (2), assuming that the equipment was sold for $78,600 instead of $91,500. If an amount box does not require an entry, leave it blank.
| fill in the blank 958465fc507407c_2 | fill in the blank 958465fc507407c_3 | ||
| fill in the blank 958465fc507407c_5 | fill in the blank 958465fc507407c_6 | ||
| fill in the blank 958465fc507407c_8 | fill in the blank 958465fc507407c_9 | ||
| fill in the blank 958465fc507407c_11 | fill in the blank 958465fc507407c_12 |
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