Depreciation Accumulated Depreciation, Book Value, Year Expense End of Year End of Year

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 2MC: Vorst depreciates Asset A on the double-declining-balance method. How much depreciation expense...
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Depreciation by two methods; sale of fixed asset

New tire retreading equipment, acquired at a cost of $110,000 on September 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of four years and an estimated residual value of $7,500. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected.

On September 6 of Year 4, the equipment was sold for $18,000.

Instructions

1. Determine the annual depreciation expense for each of the estimated four years of use, the accumulated depreciation at the end of earn 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. The following columnar headings are suggested for earn schedule: Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year

2. Journalize the entry to record the sale.

3. Journalize the entry to record the sale, assuming that the equipment sold for $10,500 instead of $l8,000.

Depreciation
Accumulated Depreciation, Book Value,
Year
Expense
End of Year
End of Year
Transcribed Image Text:Depreciation Accumulated Depreciation, Book Value, Year Expense End of Year End of Year
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