Mustang Company changed from straight line depreciation to double declining balance method at the beginning of 2021. The plant asset originally cost P1,500,000 in 2016 using the straight-line depreciation. Periodic depreciation using the straight-line method is P60,000.
Q: On January 1, 2021, Canyon Company decided to decrease the estimated useful life of the patent from…
A: Depreciation refers to a decline in the value of a fixed asset over its useful life. A patent is an…
Q: January 1, 2017, BMB Corporation acquired machinery at a cost of ₱500,000. BMB adopted the…
A: As per IAS 8, Accounting policies, changes in Accounting estimates and errors A change in method of…
Q: At December 31, 2020, the following existed on the records of BULGOGI Co.: Fixed Assets: $86,000…
A: Net Book Value = Fixed Assets - Accumulated Depreciation
Q: At the beginning of 2016, Robotics Inc. acquired a manufacturing facility for $12 million. $9…
A: Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to…
Q: Machinery purchased for $49,400 by Indigo Corp. on January 1, 2015, was originally estimated to have…
A: Depreciation indicates the fall in the historical amount of the fixed tangible asset acquired by the…
Q: Harley Davis Inc. started its unicycle manufacturing business in 2019 and acquired $600,000 of…
A: Compute the total accumulated depreciation- Total Accumulated Depreciation = Depreciation for Year…
Q: ABC Company purchased equipment on January 1, 2018 for ₱9,000,000. The equipment had a useful life…
A: Working Note;
Q: On October 1, 2017, ABC Company purchased a delivery equipment for P1,000,000. It had an estimated…
A: Solution : Given Purchase date October 1 2017 Purchase cost 1,000,000 Estimated…
Q: Softvoice Company disclosed that the depreciation policy on machinery is as follows A full year…
A: A reduction in the value of assets because of regular usage of assets is termed depreciation. The…
Q: On April 1, 2013, Parks Co. purchased machinery at a cost of $42,000. The machinery is expected to…
A: Depreciation is a reduction in the value of assets due to the usage of that asset. We can evaluate…
Q: On January 1, 2017, Macca, Inc., purchased equipment for OR 200,000. Macca expected a residual value…
A: Assets: Assets are the resources of an organization used for the purpose of business operations.…
Q: On January 1, 2017, Nobel Corporation acquired machinery at a cost of ₱800,000. Nobel adopted the…
A: Depreciation is expense. Expense reduce the net income due to which less tax required to be paid.…
Q: Sanders Company purchased the following on January 1, 2019: • Office equipment at a cost of…
A: Depreciation is an accounting technique for distributing a tangible or fixed asset's cost over its…
Q: equired:
A: These are the accounting transactions that are having a monetary impact on the financial statement…
Q: On March 10, 2020, Waterway Limited sold equipment that it bought for $266,880 on August 21, 2013.…
A: Depreciation: When a new fixed asset is purchased, it does not have the price that was at the time…
Q: On March 10, 2020, Pearl Limited sold equipment that it bought for $134,640 on August 21, 2013. It…
A: the question is based on the concept of Depreciation Accounting. As per the Bartleby guidelines we…
Q: On January 2, 2021, Oriole Enterprises reports balances in the Equipment account of $34,100 and…
A: Given: Purchase cost as stated in equipment account=$34,100 Accumulated Depreciation=$8,660 Book…
Q: Teal Co. purchased a machine on January 1, 2018, for $588,500. At that time, it was estimated that…
A: Depreciation is the systematic decline in the value of non-current assets as a result of wear and…
Q: For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation…
A:
Q: Required a. Prepare the journal entry(ies) necessary to record the depreciation expense on the…
A: Depreciation: A charge on the fixed assets of the company that reduces the value of the asset is…
Q: For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation…
A: Unerdepreciated value as on January 2021 = Cost of the assets - Accumulated deprecitaion = $2848000…
Q: On January 1, 2017, Easy Company acquired an equipment for P8,000,000. The equipment is depreciated…
A: Thanks for the Question Bartleby's Guidelines “Since you have posted a question with multiple…
Q: Prepare general journal entries for the transactions
A: Straight line of Depreciation It is the simple way which measures the loss of value of an asset…
Q: For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation…
A: The depreciation expense is charged on fixed assets as reduced value of the fixed asset with usage…
Q: On January 2, 2021, the Jackson Company purchased equipment to be used in its manufacturing process.…
A: Depreciation records the usage of a fixed asset over a period of time and allocates its cost to the…
Q: On January 1, 2021, SMC decided to dispose of an item of plant that is carried in its records at a…
A: Impairment loss is the difference between the carrying value of asset and the recoverable amount of…
Q: On January 2, 2017, Bangs Company purchased equipment costing P1,500,000. The estimated useful life…
A: As per IFRS 5, at the time of initial recognition of an asset as held for sale, asset shall be…
Q: Harley Davis Inc. started its unicycle manufacturing business in 2020 and acquired $600,000 of…
A: Depreciation expense is the amount depreciated on a company's assets in a single period, whereas…
Q: On July 1, 2019, Nuuty Inc., a calendar-year company, purchased a machine for a cash price of…
A: Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets…
Q: Day SA acquired the following assets in January 2017. Equipment, estimated service life, 5 years;…
A: Sum of years digit method is an accelerated method for calculating the depreciation. It will be…
Q: On March 10, 2020, Waterway Limited sold equipment that it bought for $266,880 on August 21, 2013.…
A: Depreciation: It is an expense incurred in the day-to-day normal use of assets during the…
Q: BTS Company purchased machinery for P250,000 on July 1, 2018. Freight and installation costs…
A: Solution... Total cost of machinery = Cost + installation = P250,000 + P18,000 = P268,000…
Q: siness in 2019 and acquired $600,000 of equipment at the beginning of 2019. It decided to use the…
A: Harley Davis Inc. started its unicycle manufacturing business in 2019 and acquired $600,000 of…
Q: Mercury Inc. purchased equipment in 2019 at a cost of $207,000. The equipment was expected to…
A: Units of production method is also known as units of activity and units of usage method.This is the…
Q: Prepare the journal entry necessary to record the depreciation expense on the building in 2021.…
A: A journal entry is used to record day-to-day transactions of the business by debiting and crediting…
Q: EggHeart Industries changed from the double-declining-balance to the straight-line method in 2021 on…
A: DEPRECIATION AS PER DOUBLE DECLINING BALANCE METHOD- depreciation as per the double-declining…
Q: Laur Company uses the composite method of depreciation and has a composite rate of 25%. During 2020,…
A: SOLUTION- FORMULA- COMPOSITE RATE = DEPRECIATION EXPENSE / HISTORICAL COST. COMPOSITE RATE =…
Q: On December 1, 2021, Malaluan Corporation decided to dispose of an item of plant that is carried in…
A: The question is related to Impairment of Assets. As per Impairment of Assets, Impairment Loss is…
Q: For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation…
A: A journal entry is the process of recording or maintaining track of any financial or non-financial…
Q: . The company uses the declining-balance method of depreciation with a declining balance rate of 8%.…
A:
Q: On January 1, 2017, Loko Corporation acquired equipment at a cost of ₱1,800,000. Loko adopted the…
A: Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets…
Q: On January 1, 2019, Fur Company purchased a machinery at a cost of P goods 21,000,000 with an…
A: Solution: DDB rate = (1/10)*2 = 20% Accumulated depreciation for 2019 and 2020 = (21000000*20%) +…
Q: On January 1, 2016, LLC Corporation purchased a building and equipment that have the following…
A: The depreciation expense is charged on asset which reduces the value of fixed asset with the passage…
Q: GOLF Company changed from straight line depreciation to double declining balance method at the…
A: Depreciation for 2022 = Net book value of the plant at the end of 2021 x Double declining…
Q: On April 1, 2017, Mills Company acquired equipment for $125,000. The estimated useful life is six…
A: 1. Under straight line method, depreciation is computed by the following formulaDepreciation under…
Q: ABC Company has an equipment acquired on January 1, 2018 at a cost of P2,200,000 with estimated…
A: Given, 1/1/18 - purchased equipment worth P2200000. residual value = P200000. estimated useful life…
Q: On January 1, 2016, LLC Corporation purchased a building and equipment that have the following…
A: Since you have posted multiple question , we will do the first one for you . In order to get…
Q: Mustang Company changed from straight line depreciation to double declinir method at the beginning…
A: Step 1 Depreciation is the written don in the value of the assets.
Q: On January 1, 2019, Nobel Corporation acquired machinery at a cost of P600,000. Nobel adopted the…
A: Annual Depreciation = (Cost of the assets - Salvage value) / life of the assets = (600000- 0) / 10…
Q: On January 1, 2016, Margo Company acquired machinery at a cost of $160,000. This machinery was being…
A: Solution.. Life of the asset = 5 years Rate of depreciation under double Declining method = 200%…
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.
Mustang Company changed from straight line
Step by step
Solved in 2 steps
- 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.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.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. 10,000
- On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.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.During 2019, White Company determined that machinery previously depreciated over a 7-year life had a total estimated useful life of only 5 years. An accounting change was made in 2019 to reflect the change in estimate. If the change had been made in 2018, accumulated depreciation at December 31, 2018, would have been 1,600,000 instead of 1,200,000. As a result of this change, the 2019 depreciation expense was 100,000 greater than it would have been if no change were made. Ignoring income tax considerations, what is the proper amount of the adjustment to Whites January 1, 2019, balance of retained earnings? a. 0 b. 100,000 c. 280,000 d. 400,000
- Hathaway 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?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.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?
- 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.At the end of 2020, Magenta Manufacturing Company discovered that construction cost had been capitalized as a cost of the factory building in 2015 when it should have been treated as a cost of production equipment installation costs. As a result of the misclassification, the depreciation through 2018 was understated by 110,000, and depreciation for 2019 was understated by 90,000. What would be the consequences of correcting for the misclassification of the property cost? a. The taxpayer uses the FIFO inventory method, and 25% of goods produced during the period were included in the ending inventory. b. The taxpayer uses the LIFO inventory method, and no new LIFO layer was added during 2019.