Tasty Subs acquired a delivery truck on October 1, 2021, for $21,600. The company estimates a residual value of $1,200 and a six-year service life. Required: Calculate depreciation expense using the straight-line method for 2021 and 2022, assuming a December 31 year-end.
Q: Cutter Enterprises purchased equipment for $93,000 on January 1, 2021. The equipment is expected to…
A: Depreciation expense refers to the fall in the value of the asset due to passage of time, wear and…
Q: Whispering Company purchased equipment for $286,800 on October 1, 2020. It is estimated that the…
A: Depreciation is a charge which is charged on the fixed assets as it is the use of this asset portion…
Q: On January 1, 2021, Piling Company has Land, Building and Machinery with brought forward balances…
A: Total accumulated depreciation on December 31, 2021 = Total accumulated depreciation on January 01,…
Q: On April 30, 2023, Foley Distribution Service purchased a copy machine for $53,400. Foley…
A: Straight line method is one of simple method used to calculate depreciation expense, under this…
Q: Togo’s Sandwiches acquired equipment on April 1, 2021, for $18,000. The company estimates a residual…
A: For the year 2021: 9 months is computed from April to December
Q: Togo's Sandwiches acquired equipment on April 1, 2021, for $16,500. The company estimates a residual…
A: Definition: Straight-line depreciation method: The depreciation method which assumes that the…
Q: Whispering Company purchased equipment for $286,800 on October 1, 2020. It is estimated that the…
A: Depreciation is an expense charged on the value of fixed assets. It can be calculated using a…
Q: El Tapitio purchased restaurant furniture on September 1, 2021, for $45,000. Residual value at the…
A: Depreciable costs = Cost of asset - Residual value = $45,000 - $6,000 = $39,000.
Q: On September 30, 2018, Bricker Enterprises purchased a machine for OMR 11,000. The estimated service…
A: Depreciation is the decrease in value of an asset due to various reasons like wear and tear,…
Q: Tasty Subs acquired a delivery truck on October 1, 2021, for $25,800. The company estimates a…
A: Depreciation using straight line method = (Cost of the asset - salvage value) / Asset useful life…
Q: Forrester Company purchased a machine on January 1, 2019 for $60,000, with a 5-year life, and a…
A: Double declining depreciation rate = Straight line depreciation rate x 2 = (100/5 years) x 2 = 40%
Q: Bataan Company purchased a machinery that was installed and ready for use on January 1, 2019 at a…
A: Depreciation rate under double declining rate = = 2 / useful life x 100% Given…
Q: Marigold Corporation purchased a new machine for its assembly process on August 1, 2020. The cost of…
A: As posted multiple sub parts we are answering only first three sub parts kindly repost the…
Q: Cutter Enterprises purchased equipment for $99,000 on January 1, 2021. The equipment is expected to…
A: An accelerated depreciation method of calculation is called the double-declining balance (DDB)…
Q: Storm Delivery Company purchased a new delivery truck for $69,000 on April 1, 2019. The truck is…
A: Answer 1) Computation of depreciation expenses for 2019 and 2020 is as follows: Double -declining…
Q: Nash Company purchased equipment for $199,200 on October 1, 2020. It is estimated that the equipment…
A: Sum of years digit method is method of computation of depreciation for fixed assets. It is totalled…
Q: Bataan Company purchased a machinery that was installed and ready for use on January 1, 2019 at a…
A: Depreciation expense is the cost portion which is allocated to the fixed assets of the company and…
Q: Whispering Company purchased equipment for $286,800 on October 1, 2020. It is estimated that the…
A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: Sorter Company purchased equipment for $320,000 on January 2, 2019. The equipment has an estimated…
A: The computation of depreciation expense for 2019 varies from each of the given methods which is…
Q: Skysong Company purchased equipment for $199,200 on October 1, 2020. It is estimated that the…
A: Hi Student Since there are multiple subparts, we will answer only first three subparts. If you want…
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: Cheers Delivery Company purchased a new delivery truck for $48,000 on April 1, 2019. The truck is…
A:
Q: Cutter Enterprises purchased equipment for $72,000 on January 1, 2021. The equipment is expected to…
A: "Since you have asked multiple questions, we will solve one question for you. If you want any…
Q: Sandhill Ltd. purchased a delivery truck on January 1, 2021, at a cost of $80,640. The truck is…
A: Depreciation is considered a reduction in the value of assets due to the use of that asset. We can…
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 .…
Q: is to use the 200% double declining balance method for the first two years of the asset’s life and…
A: Accumulated Depreciation: The contra assets account which is used for accumulating all those…
Q: Mountain View Resorts purchased equipment at the beginning of 2021 for $40,000. Residual value at…
A: Answer 1) Calculation of Depreciation expense using Straight Line Method Depreciation expense for…
Q: Kansas Enterprises purchased equipment for $80,500 on January 1, 2021. The equipment is expected to…
A: Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets…
Q: On September 30, 2021, Bricker Enterprises purchased a machine for $200,000. The estimated service…
A: Sum of years = 10+9+8+7+6+5+4+3+2+1 = 55 Number of years Outstanding = 10 years - 0.25 years(from…
Q: Skysong Company purchased equipment for $199,200 on October 1, 2020. It is estimated that the…
A: Depreciation is the value of all fixed assets reduce gradually over time due to Wearing out,…
Q: n August 31, 2019, CAMELLIA Company purchased a new machinery for ₱540,000. The machinery has an…
A: Solution: Purchase price of machinery = ₱540000 Estimated useful life = 5 years Estimated salvage…
Q: On January 1, 2018, Canseco Plumbing Fixtures purchased equipment for $30,000. Residual value at the…
A: (a) Straight-line method: Under the straight-line method of depreciation, the same amount of…
Q: Glacier Company purchased a machine which was installed and put into service on January 1, 2019 at a…
A: Calculate the depreciation as follows: Depreciation = (Cost of asset - salvage value) / Life
Q: Bonita Company purchased a new plant asset on April 1, 2020, at a cost of $738,000. It was estimated…
A: Double declining depreciation rate = Straight line depreciation rate x 2 = (100/20 years) x 2 = 10%…
Q: Tasty Subs acquired a delivery truck on October 1, 2021, for $25,800. The company estimates a…
A: Depreciation is the allocation of cost of asset over the useful life of the asset. There are several…
Q: double-declining-balance method, depreciation for 2021 and the book value at December 31, 2021,…
A: Double declining balance method :- It is the form of accelerated depreciation method. In this…
Q: Kansas Enterprises purchased equipment for $76,000 on January 1, 2021. The equipment is expected to…
A: Depreciation as per straight line method = (Cost - Residual value)/Useful life Double-declining rate…
Q: Kaila Corporation purchased a truck for 225,000 on January 1, 2017. It was originally depreciated on…
A: Calculation of depreciation Expenses for the year 2019 are as follows:
Q: On January 1, 2020, ABC Company purchased factory equipment for 3,000,000. Estimated useful life of…
A: Depreciation means the amount fixed assets written off due to normal wear and tear , normal usage ,…
Q: On 1 July 2019, Briarly Pty Ltd purchased a new printing machine for $152,000. The company expected…
A: Depreciation means allocation of cost of asset over the useful life of the asset. It can be charged…
Q: Concord Corporation purchased a new machine for its assembly process on August 1, 2020. The cost of…
A: Depreciation is a reduction in the value of assets due to the usage of that asset. We can evaluate…
Q: Nash Company purchased equipment for $199,200 on October 1, 2020. It is estimated that the equipment…
A: ''Since you have posted a question with multiple parts, we will solve the first three sub-parts for…
Q: On April 30, 2023, Foley Distribution Service purchased a copy machine for $53,400. Foley…
A: Straight line method is a depreciation method. In this method, same amount of depreciation is…
Q: Freedom Co. purchased a new machine on July 2, 2019, at a total installed cost of $48,000. The…
A: The question is related to the Depreciation Accounting. In the given question Depreciation is…
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: Togo's Sandwiches acquired equipment on April 1, 2021, for $15,000. The company estimates a residual…
A: Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life…
Q: Tasty Subs acquired a delivery truck on October 1, 2021, for $21,500. The company estimates a…
A: Depreciation: It refers to a gradual decrease in the fixed asset’s value because of obsolescence,…
Q: Tasty Subs acquired a delivery truck on October 1, 2021, for $26,500. The company estimates a…
A: Depreciable cost=Total Cost-Residual value=$26,500-$3,500=$23,000
Q: Coronado Company purchased equipment for $222,800 on October 1, 2020. It is estimated that the…
A: a.
Q: Vita Water purchased a used machine for $117,200 on January 2, 2020. It was repaired the next day at…
A: The depreciation expense is charged on fixed assets as reduction in the value of fixed assets with…
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.
Tasty Subs acquired a delivery truck on October 1, 2021, for $21,600. The company estimates a residual value of $1,200 and a six-year service life.
Required:
Calculate
Trending now
This is a popular solution!
Learn your way
Includes step-by-step video
Step by step
Solved in 2 steps
- 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?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.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.
- 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.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. 10,000At 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.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?Albany Corporation purchased equipment at the beginning of Year 1 for 75,000. The asset does not have a residual value and is estimated to be in service for 8 years. Calculate the depreciation expense for Years 1 and 2 using the double-declining-balance method. Round to the nearest dollar.
- 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.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. 400,000Akron 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.