Sweet Company purchased equipment on January 1, 2018, for S28,000. Suppose Sweet Company sold the equipment for $4,000 on December 31, 2019. Accumulated Depreciation as of December 31, 2019, was $11,000. Journalize the sale of the equipment, assuming straight-line depreciation was used.
Q: Define, in your own words, what auditing is. Mention three (3) positive effects that companies obtai...
A: Accounting is rhe process of recording and classifying accounting information so that useful financi...
Q: The AAA account for an S corporation can never be a negative number. True False
A: AAA Account : It is the accumulated adjustment account which is used by S corporation and which cont...
Q: Chapter 11: Internal Control and COSO Framework During your audit of ABC Sports, Inc., a retail ch...
A: Internal control seems to be a method implemented by management and other staff to offer adequate co...
Q: Required information [The following information app Armstrong Corporation manuf become obsolete due ...
A: The question is based on the concept of Financial Accounting.
Q: m, a shareholder in Lager, Inc., (a C corporation), would like to sell 800 of his shares of stock in...
A: When a firm encourages stockholders to sell a part of their stock back to the company, this is known...
Q: Activity 1. Listed below are seven business transactions of EMF Company during its first month of op...
A: The accounting equation states that total assets are equal to total liabilities and shareholders' eq...
Q: The following information is from the annual financial statements of Raheem Company. Year 3 Year 2 Y...
A: Account receivable turnover measures the number of times the company collects its account receivable...
Q: Ali received an invoice dated 21 March 2021 worth RM 450,000 for 100 units of laptops. The invoice w...
A: Accounting payment terms seem to be the payment policies that providers place on their consumers. Pa...
Q: Need help finishing this problem Demo Consulting is a consulting firm owned and operated by Jess...
A: Financial statement means the statement including income statement , balance sheet , cash flow state...
Q: On January 1, 2020, Kelly Company issued bonds with the face amount of P 5,000,000, 8% serial bonds ...
A: The calculation of interest expense has been made as follows: Interest expense for the year=Bond pro...
Q: In January, 2022, Harmony Inc. has the following expenditures related to manufacturing a new generat...
A: In manufacturing industries, the most commonly used fixed asset are the machineries. The acquisition...
Q: A corporation borrowed money through an 9-month, 8% note for $120,000 on September 1, 2020. The note...
A: Note payable is a form of liability for the business, on which interest payments needs to be made ou...
Q: What is the difference between the aggregate and entity theory of partnership taxation? Can you plea...
A: A partnership is a kind of business structure in which two or more people agree to carry out commerc...
Q: intangible assets are long term assets and would NOT include: Group of answer choices A. Goodwill B....
A: Intangible Asset: An intangible asset is a distinguishable non-monetary item that does not have a ph...
Q: Monica, Phoebe, Rachel, Chandler, Joey, and Ross bid on a much coveted resource (Marcel the monkey)....
A: according to the guidelines we are allowed to solve 3 subpart (first 3) subpart in case multiple sub...
Q: Question 29 Experience rating removes the incentive to _______, the practice whereby insurance comp...
A: An experience rating compares the amount of damage suffered by an insured person to the amount of da...
Q: CORONADO COMPANY Statement of Cash Flows
A: Assets 2022 2021 Cash 37,500 19,100 Accounts Receivable 33,000 20,000 Inventory 30,700 20,200 ...
Q: a. Calculate the depreciable cost of the warehouse. b. Calculate the annual depreciation expense tha...
A: a. Depreciable Cost = Cost - Salvage Value b. Annual Depreciation = Total Depreciable Cost / Useful ...
Q: Statement 1: In the sale of a financial asset measured at fair value through OCI, the difference bet...
A: As per IFRS 9, Financial instrument, On derecognition of a financial asset measured at fair value th...
Q: Aris, Blair, and Cassie are partners who split profits in a 3:3:4 ratio. They have recently been ove...
A: Solution: Total partnership capital before admission of Shane = P60,000 + P80,000 + P120,000 = P260,...
Q: Lower-of-Cost-or-Market Method On the basis of the following data, determine the value of the invent...
A: Using LCM method, the inventory is valued at lower of the value between market value and cost value....
Q: The problem to be resolved: The following trial balance was extracted from the books of Movies To...
A: 1. Adjusting Entries - Adjusting Entries are the entries which are made at the year end. Due to adju...
Q: The simple interest rate charged on a $8,600 loan is two-thirds of 1% per month. If the principal an...
A: Simple Interest Rate = 1% x 12 x 2 / 3 = 8% Interest = Principal x Interest Rate x No. of Years Here...
Q: SweetFish Corp. issued bonds with a par value of $920,000 and a five-year life on May 1, 2020. The c...
A: Formulas Used:- Cash Interest Paid = @5.75% of 920,000 Period Interest Expenses = @6% of Carrying Va...
Q: A 6 percent corporate coupon bond is callable in five years for a call premium of one year of coupon...
A: Bonds are the fixed interest bearing securities that are issued by the companies.
Q: The following accounts increased during 2020: Accounts Receivable $13,000, Inventory $11,000, Accoun...
A: Particulars Amount Cash Flow from Operating Activities Net Income $20000 Adjustment to ...
Q: At the beginning of the year, AlLmight had a receivable amounting to P 100,000. The recorded sales f...
A: Bad debts expense = Total receivables - collectible receivables where, Collectible receivables = To...
Q: Ch Zytel Corporation produces cleaning compounds and solutions for industrial and household use. Whi...
A: Calculation maximum number of jar sold for futher processing are as follows.
Q: Required information [The following information applies to the questions displayed below.] Built-Tig...
A: The cash budget is prepared to record cash receipts and cash payments for the period and find out an...
Q: Calculate the trade discount and net price (in $) to the nearest cent. List Price Trade Discount Rat...
A: There are two type of discounts that is given to customer at the time of sale of goods. One is trade...
Q: Suppose Tom is 20 years old. He works till 50 years old, retire, and live up to 80 years old. While...
A: A beta of one indicates that the price of the security moves in lockstep with the market. A beta gre...
Q: A company had the following transactions during September, the first month of its operations: Issued...
A: The income statement is prepared to record the revenues and expenses of the current period. It tells...
Q: What is the purpose of thestatement of cash flows?
A: The statement of cash flows is a statement that summarizes the movement of cash and cash equivalents...
Q: Assume that you are one of the owners of Pinoy Corporation. Upon reviewing the project income statem...
A: The income statements are projected to forecast the profit in future years on the basis of estimatio...
Q: Problem 4: Ocean Company recently acquired several items of property, plant and equipment. The tran...
A: 1. Building costcash. P1000000 Value of shares P6000000 ...
Q: Dallas and Weiss formed a partnership to manage rental properties, by investing $207,000 and $243,00...
A: Partnership means where two or more person comes together to do some common business activity and ea...
Q: At that date, the carrying amount of the land was P5,000,000 and the balance in the revaluation surp...
A: Impairment loss is the difference in the recoverable amount and carrying of the asset. Recoverable a...
Q: 80. Oblation Bank loaned P9,000,000 to a borrower on January 1, 2017. The terms of the loan were pay...
A: Calculation of impairment loss, interest income , carrying amount are as follows.
Q: 4) Selected accounts follow of Bramble Limited at December 31, 2020: Finished Goods Inventory $1...
A: A balance sheet is a representation of an individual's personal or corporation's financial balances ...
Q: The following information is taken from JYP Company's shareholders' equity section: December 31, 20...
A: Retained Earnings: When a company's direct and indirect expenses, income taxes, and dividends to sha...
Q: mile company exchanged used equipment for another equipment of Frown Company. The following informat...
A: These are the accounting transactions that are having a monetary impact on the financial statement o...
Q: Sheridan Inc. owns these assets at the statement of financial position date: Cash in bank (savings a...
A: Cash and cash equivalents refers to most liquid current assets of the business and also includes sho...
Q: Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and...
A: Variable costs are costs that change with each level of output while fixed costs do not change with ...
Q: What are the 3 types of credits and cite their differences
A: credit is referred ability of borrowing money but the payment is made at later date. so there need t...
Q: The cost of goods sold computations for Novak Company and Flounder Company are shown below. Compute ...
A: Days in Inventory = 365 x Average Inventory / Cost of Goods Sold Average Inventory = (Beginning Inve...
Q: Statement 1: Financial assets held for trading shall be measured at fair value through profit or los...
A: Securities can be classified under three categories which are, (1) Held to maturity (2) Trading sec...
Q: Juan invested $10,500 into a fund earning 7.50% compounded monthly. She plans to withdraw $700 from ...
A: Working note for calculations. Note for Converting Quarter into years:- Number of year to deplete =...
Q: 9) At the end of its 2020 fiscal period, Barton's Books, a sole proprietorship, has ending accounts ...
A: Accounts Receivable While using the Accounts receivable management it is provide the provision of al...
Q: The trial balance of Pina Colada Ltd. at December 31, 2020, follows: Debits Credits Cash $...
A: A balance sheet is a representation of an individual's personal or corporation's financial balances ...
Q: tée reports the following items: cash in bank $17,500; payroll bank account $6,000; cas s consisting...
A: Cash and Cash Equivalents include cash in hand ,cash at bank and all the investments that are short ...
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.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
- 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.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.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.
- 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. 10,000Hunter 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.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.
- 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. $134,000Depreciation 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.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 December 31, 2019, Vail Company owned the following assets: Vail computes depreciation and amortization expense to the nearest whole year. During 2020, Vail engaged in the following transactions: Required: 1. Check the accuracy of the accumulated depreciation balances at December 31, 2019. Round to the nearest whole dollar in all requirements. 2. Prepare journal entries to record the preceding events in 2020, as well as the year-end recording of depreciation expense. 3. Prepare an Accumulated Depreciation account for each category of assets, enter the beginning balance, post the journal entries from Requirement 2, and compute the ending balance.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?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.