On September 19, 2020, Sunland Company purchased machinery for $478000. Salvage value was estimated to be $24000. The machinery will be depreciated over eight years using the sum-of-the-years'-digits method. If depreciation is computed on the basis the nearest full month, Sunland should record depreciation expense for 2021 on this machinery of
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A: Depreciation:-It is the reduction in the value of the assets due to normal wear and tear. It is the…
Q: The December 31, 2020 balance sheet of Swifty Company showed Equipment of $75,000 and Accumulated…
A: Revised annual depreciation = Depreciable cost / Remaining useful life
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A: Given information:
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A: Depreciation is a method of accounting that distributes the expense of a tangible or physical asset…
Q: On January 1, 2018, Tyson Manufacturing Corporation purchased a machine for $40,000,000. Tyson's…
A:
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A: Straight line depreciation rate = 100% / Life of asset = 100% / 4 = 25% Double declining balance…
Q: On August 31, 2019, CROCUS Company purchased a new machinery for ₱540,000. The machinery has an…
A: Hi student Since there are multiple questions, we will answer only first question.
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A: Depreciation is the reduction in the value of an asset due to normal wear and tear, passage of time,…
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A: Depreciation: Decreasing value of Assets over its useful life period.
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A: The depreciation expense is charged on fixed assets as reduction in value of fixed assets with the…
Q: On January 1, 2019, Beldon Inc. purchased a new machine for $60,000. Its estimated useful life is…
A: Double declining balance method is an accelerated method of depreciation where asset is depreciated…
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A: Depreciation rate under double declining rate = = 2 / useful life x 100% Given…
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A: An accelerated depreciation method of calculation is called the double-declining balance (DDB)…
Q: Parnell Company acquired construction equipment on January 1, 2020, at a cost of $70,100. The…
A: Introduction: A journal entry is being used to record a corporate transaction in the accounting…
Q: On January 1, 2019, Williams Company purchased a copy machine. The machine costs $160,000, its…
A: Depreciation Expenses - Depreciation Expenses are the expense incurred on the wear and tear of the…
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…
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A: 1. Following are the calculation of depreciation expense:
Q: On January 1, 2021, Morrow Inc. purchased a spooler at a cost of $40,000. The equipment is expected…
A: Depreciation expense per unit = (Cost- residual value)/Total expected units to produce
Q: Green Vegetable Mfg. Co. purchased equipment on January 1, 2019, at a cost of $800,000. The…
A: Depreciation is considered a reduction in the value of asset due to uses of that asset. We can…
Q: Green Vegetable Mfg. Co. purchased equipment on January 1, 2019, at a cost of $800,000. The…
A: Depreciation is a reduction in the value of assets due to the usage of that asset. We can evaluate…
Q: Parnell Company acquired construction equipment on January 1, 2020, at a cost of $75,900. The…
A: Cost of equipment $72,000 Expected useful life 6 residual value $15,000 fair value…
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A: Depreciation (units-of-activity) = [(Cost - Salvage Value) / Total Working Hours] x Hours Worked
Q: UMET Co. purchased equipment on January 1, 2020, at a cost of $600,000. The equipment is expected to…
A: Hi student Since there are multiple subparts,we will answer only first three subparts.…
Q: SYD method, how much is the depreciation expense
A: Estimated useful life = 5 years Sum of years' digits = 5 + 4 + 3 + 2 + 1 = 15
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A: Straight-line depreciation method: The depreciation method which assumes that the consumption of…
Q: On January 1, 2021 the Hogan Manufacturing Company purchased a machine for $250,000. The company…
A: Depreciation is an expense charged against the income for the wear and tear of the equipment .…
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A: Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets…
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A: Depreciation is the allocation of cost of asset over it's useful life. Units of production is a…
Q: On April 1, 2020, an entity purchased machinery for P3,300,000. The machinery has an estimated…
A: Fixed assets that are used in a business will undergo certain wear and tear due to continuous…
Q: Rehearsal Corporation purchased equipment on Jan 1, 2020, for $250,000. The equipment was expected…
A: The depreciation expense is charged on fixed assets as reduced value of the fixed asset with usage…
Q: On July 1, 2019, Ivanhoe Company purchased new equipment for $90,000. Its estimated useful life was…
A: SOLUTION- COMPUTE DEPRECIATION=COST - SALVAGE VALUE / ESTIMATED LIFE…
Q: On January 1, 2020, Coronado Industries purchased a new machine for $4290000. The new machine has an…
A: Depreciation: It refers to a gradual decrease in the fixed asset’s value because of obsolescence,…
Q: Silverman Company purchased machinery for $162,000 on January 1, 2020. It is estimated that the…
A: Depreciation: Depreciation is a method of reducing the capitalized cost of long-lived operating…
Q: Millco Inc., acquired a machine that cost $456,000 early in 2019. The machine is expected to last…
A: a) Depreciation straight line method =(Cost -salvage)/life = (456000-66000)/8 = 48750 per…
Q: On January 1, 2020, Swifty Corporation purchased a new machine for $4110000. The new machine has an…
A: Depreciation means reduction in value of the asset over the useful life of the asset.
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A: Depreciation means allocation of cost of asset over the useful life of the asset. It can be charged…
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Q: What is the total accumulated depreciation on December 31, 2020?
A: Formula: Depreciation Expenses= Remaining Life of assetSum of Year's Digits×Depreciable Cost
Q: ramble Corp. purchased a depreciable asset for $698000 on April 1, 2018. The estimated salvage value…
A: Price = $ 698,000 Salvage Value = $ 68,000 Estimated useful life of years = 5 years
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Q: Kansas Enterprises purchased equipment for $74,500 on January 1, 2021. The equipment is expected to…
A: Solution: Annual depreciation using SLM = (Cost - Residual value) / Useful life
Q: Sheridan Company purchased equipment for $ 120000 on January 1, 2020, and will use the…
A:
Q: PIKACHU purchased an equipment for P540,000 on January 1, 2020. The equipment has an estimated…
A: Sum of year digit method is a depreciation method where the depreciation for the year is calculated…
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A: a.
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A: Accumulated depreciation: The total amount of depreciation expense deducted, from the time asset…
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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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- 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.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.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 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.
- 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.Chapman Inc. purchased a piece of equipment in 2018. Chapman depreciated the equipment on a straight-line basis over a useful life of 10 years and used a residual value of $12,000. Chapmans depreciation expense for 2019 was $11,000. What was the original cost of the building? a. $98,000 b. $110,000 c. $122,000 d. $134,000Bliss 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.
- Akron Incorporated purchased an asset at the beginning of Year 1 for 375,000. The estimated residual value is 15,000. Akron estimates that the asset has a service life of 5 years. Calculate the depreciation expense using the sum-of-the-years-digits method for Years 1 and 2 of the assets life.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?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.