New lithographic equipment, acquired at a cost of $859,200 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $96,660. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On March 4 of Year 5, the equipment was sold for $141,422. Required: 1. Determine the annual depreciation expense for each of the estimated five 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 (a) the straight-line method and (b) the double-declining-balance method. Round your answers to the nearest whole dollar. 2. Journalize the entry to record the sale assuming that the manager chose the double-declining-balance method. 3. Journalize the entry to record the sale in (2) assuming that the equipment was sold for $96,962 instead of $141,422. Refer to the Chart of Accounts for exact wording of account titles
New lithographic equipment, acquired at a cost of $859,200 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $96,660. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On March 4 of Year 5, the equipment was sold for $141,422. Required: 1. Determine the annual depreciation expense for each of the estimated five 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 (a) the straight-line method and (b) the double-declining-balance method. Round your answers to the nearest whole dollar. 2. Journalize the entry to record the sale assuming that the manager chose the double-declining-balance method. 3. Journalize the entry to record the sale in (2) assuming that the equipment was sold for $96,962 instead of $141,422. Refer to the Chart of Accounts for exact wording of account titles
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 9MC: A fixed asset with a 5-year estimated useful life is sold during the second year. How would the use...
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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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Question
New lithographic equipment, acquired at a cost of $859,200 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $96,660. The manager requested information regarding the effect of alternative methods on the amount of
On March 4 of Year 5, the equipment was sold for $141,422.
| Required: | |
| 1. | Determine the annual depreciation expense for each of the estimated five years of use, the |
| 2. | |
| 3. | Journalize the entry to record the sale in (2) assuming that the equipment was sold for $96,962 instead of $141,422. Refer to the Chart of Accounts for exact wording of account titles. |
Transcribed Image Text:b. Double-declining-balance method
Accumulated Depreciation,
Year
Depreciation Expense
End of Year
Book Value, End of Year
1
%24
24
%24
3
4
2.
Transcribed Image Text:1. Determine the annual depreciation expense for each of the estimated five 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 (a) the straight-line method and (b) the double-declining-balance method. Round your answers to the nearest whole dollar.
a. Straight-line method
Accumulated Depreciation,
Year
Depreciation Expense
End of Year
Book Value, End of Year
$152,508
$152,508
152,508
305,016
3
152,508
4
152,508
152,508
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