Could you explain me how to do the option d. Thanks. Equipment was purchased on January 1, 2017 for $70,000. The asset is expected to last for four years, at whichtime the estimated residual value will be $11,000.Requireda) Prepare a table showing the amount of depreciation expense each year, accumulated depreciation to date andnet book value. The company uses straight-line depreciation.Do not enter dollar signs or commas in the input boxes.Round all dollar figure answers to the nearest whole number.Year Cost of Long-Term Asset Depreciation Expense Accumulated Depreciation Net Book Value2017$70,000 $1475014750$55250201840500257501100020192020Jan 1$70,000 $14750$70,000 $14750$70,000 $14750b) The asset was sold for $15,000 on the first day of 2021. Prepare the journal entry to record the sale.Enter all debit accounts in alphabetical order.Enter all credit accounts in alphabetical order.DateAccount Title and ExplanationAccumulated DepreciationCashEquipmentGain on Disposal of AssetTo record sale of equipment for cashO4295004425059000Debit5900015000Credit700004000 c) Using the same purchase information at the beginning of the question, prepare the table assuming that thecompany used double-declining-balancedepreciation.Year2017201820192020Year201720182019Net Book Value at theBeginning of the Year$70000$35000$17500202011000Cost of Long-TermAsset$70,000$70,000d) Using the same purchase information and residual value at the beginning of the question, assume that thecompany uses the units-of-production method. The asset can produce one million units. Prepare the depreciationtable.$70,000$70,000DepreciationExpense$ 35000$ 17500$ 6500$0UnitsProduced210,000 $12390140,000 $120,000 $DepreciationExpense360,000 $AccumulatedDepreciation$ 35000$ 52500$5900059000$$LABA$Net Book Value at the Endof the Year12390AccumulatedDepreciation$ 35000$ 17500$1100011000Net Book ValuetAGATA57610

Depreciation expense :— It is the allocation of depreciable cost of asset over the estimated useful…

Using the same purchase information at the beginning of the question, prepare the table assuming that the ompany used double-declining-balance depreciation. Year 2017 2018 2019 2020 Year 2017 2018 2019 Net Book Value at the Beginning of the Year $70000 $35000 $17500 2020 11000 Cost of Long-Term Asset $70,000 1) Using the same purchase information and residual value at the beginning of the question, assume that the ompany uses the units-of-production method. The asset can produce one million units. Prepare the depreciation able. $70,000 $70,000 $70,000 Depreciation Expense $35000 $17500 $6500 $0 Units Produced 210,000 $12390 140,000 $ 120,000 $ 360,000 $ Accumulated Depreciation $ 35000 $52500 $59000 Depreciation Expense 59000 $12390 $ LA LA $ LA Net Book Value at the End of the Year $ Accumulated Depreciation $ 35000 $17500 $11000 11000 Net Book Value $ LA $ 57610

Using the same purchase information at the beginning of the question, prepare the table assuming that the ompany used double-declining-balance depreciation. Year 2017 2018 2019 2020 Year 2017 2018 2019 Net Book Value at the Beginning of the Year $70000 $35000 $17500 2020 11000 Cost of Long-Term Asset $70,000 1) Using the same purchase information and residual value at the beginning of the question, assume that the ompany uses the units-of-production method. The asset can produce one million units. Prepare the depreciation able. $70,000 $70,000 $70,000 Depreciation Expense $35000 $17500 $6500 $0 Units Produced 210,000 $12390 140,000 $ 120,000 $ 360,000 $ Accumulated Depreciation $ 35000 $52500 $59000 Depreciation Expense 59000 $12390 $ LA LA $ LA Net Book Value at the End of the Year $ Accumulated Depreciation $ 35000 $17500 $11000 11000 Net Book Value $ LA $ 57610

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 8P: Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of...

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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.
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?
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.
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.
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.
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.
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.
Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for 1,500 each. The company uses group depreciation on a straight-line basis. Required: 1. Prepare journal entries to record the acquisition and the first years depreciation expense. 2. If one of the cars is sold at the beginning of the second year for 7,000, what journal entry is required?
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
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.
The following are independent errors: a. In January 2019, repair costs of 9,000 were debited to the Machinery account. At the beginning of 2019, the book value of the machinery was 100,000. No residual value is expected, the remaining estimated life is 10 years, and straight-line depreciation is used. b. All purchases of materials for construction contracts still in progress have been immediately expensed. It is discovered that the use of these materials was 10,000 during 2018 and 12,000 during 2019. c. Depreciation on manufacturing equipment has been excluded from manufacturing costs and treated as a period expense. During 2019, 40,000 of depreciation was accounted for in that manner. Production was 15,000 units during 2019, of which 3,000 remained in inventory at the end of the year. Assume there was no inventory at the beginning of 2019. Required: Prepare journal entries for the preceding errors discovered during 2020. Ignore income taxes.