![GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD](https://www.bartleby.com/isbn_cover_images/9781260089042/9781260089042_largeCoverImage.gif)
Concept explainers
Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life. The following is the formula to calculate the depreciation.
Straight-line method:
Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.
To Determine: The depreciation on the building for the year 2018.
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Chapter 11 Solutions
GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
- Problem 4 The following information pertains to Bosh Inc.'s depreciable assets: • Machine Y cost P525,000 and was acquired on January 1, 2016. On the acquisition date, the expected useful life was 12 years with no residual value. The straight line method was used. On January 1, 2020, it was estimated that the remaining life of the asset would be 4 years and that there would be a P25,000 residual value. • A building was purchased on January 1, 2017 for P3,000,000. The building was expected to have a useful life of 20 years with no residual value. The straight line depreciation method was used. On January 1, 2020, a change was made to the sum-of-the-years'-digits method of depreciation. No change was made to the estimated useful life and residual value of the building. _3. What is the depreciation expense of Machine Y for 2020? _4. What is the depreciation expense of building for 2022?arrow_forwardwh.ca/d21/le/content/126096/viewContent/7921257/View mitaltar CETIL Situation 4: On March 31, 2017, Wayside Corporation purchased a new piece of manufacturing equipment for $1,615,000. At that time, the estimated useful life of the equipment was five years, with a residual value of $325,000. On August 1, 2020, due to increased competition causing a decreased selling price for its product, Wayside decided to discontinue the product. By December 31, 2020, there was a formal plan in place to sell the equipment, and the equipment qualified for classification as held for sale. At December 31, 2020, the equipment's fair value less costs to sell was $260,000. Due to matters beyond Wayside's control, a potential sale of the equipment fell through in 2021, although consumer confidence in Wayside's product increased significantly because of reported defects in its competitors' products. The equipment remained classified as held for sale at December 31, 2021, when the equipment's fair value less…arrow_forwardQ.4 Swanson & Hiller, Inc., purchased a new machine on September 1, 2008 at a cost of $108,000. The machine’s estimated useful life at the time of the purchase was five years, and its residual value was $8,000. Instructions a. Prepare a complete depreciation schedule, beginning with calendar year 2008, under each of the methods listed below (assume that the half-year convention is used): 1. Straight-line. 2. 200 percent declining-balance. 3. 150 percent declining-balance, switching to straight-line when that maximizes the expense.arrow_forward
- Current Attempt in Progress X Your answer is incorrect. Metlock Company purchased equipment for $285,600 on October 1, 2025. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $12,000. Estimated production is 48,000 units and estimated working hours are 19,000. During 2025, Metlock uses the equipment for 530 hours and the equipment produces 1,100 units. Compute depreciation expense under each of the following methods. Metlock is on a calendar-year basis ending December 31. (Round rate per hour and rate per unit to 2 decimal places, e.g. 5.35 and final answers to O decimal places, e.g. 45,892.) (a) (b) (c) Straight-line method for 2025 (e) Activity method (units of output) for 2025 Activity method (working hours) for 2025 (d) Sum-of-the-years'-digits method for 2027 Double-declining-balance method for 2026 $ ta tA LA 8531 5.69 7615 51187 66797arrow_forwardE10-20 Expenditures after Acquisition McClain Company incurred the following expenditures during 2019: Apr. 9 The air conditioning system in the old manufacturing facility was replaced for $83,000. The old air conditioning system had a cost of $74,000 and a book value of $2,000. The old air conditioning system had no scrap value. June 29 Annual maintenance of $38,000 was performed. Sept. 12 The roof of the old manufacturing facility is replaced at a cost of $65,000. This expenditure substantially extended the life of the facility. Dec. 28 A new wing was added to the manufacturing facility at a cost of $275,000. This expenditure substantially increased the productive capacity of the plant. Required: 1. Prepare journal entries to record McClain’s expenditures for 2019. 2. Next Level What is the effect on the financial statements if management had improperly accounted for the: a. addition of the new wing to the manufacturing facility b. annual maintenance expendituresarrow_forwardExercise 11-11 (Algo) Disposal of property, plant, and equipment; partial periods (LO11-2] On July 1, 2016, Farm Fresh Industries purchased a specialized delivery truck for $219,000. At the time, Farm Fresh estimated the truck to have a useful life of eight years and a residual value of $27,000. On March 1, 2021, the truck was sold for $88,000. Farm Fresh uses the straight-line depreciation method for all of its plant and equipment. Partial-year depreciation is calculated based on the number of months the asset is in service. Required: 1. Prepare the journal entry to update depreciation in 2021. 2. Prepare the journal entry to record the sale of the truck. 3. Assuming that the truck was instead sold for $125,000, prepare the journal entry to record the sale. X Answer is not complete. Complete this question by entering your answers in the tabs below. Reg 1 and 2 Reg 3 Prepare the journal entries to update depreciation in 2021 and record the sale of the truck. (If no entry is required…arrow_forward
- 3 Required information [The following information applies to the questions displayed below.] On January 1, 2024, the Allegheny Corporation purchased equipment for $170,000. The estimated service life of the equipment is 10 years and the estimated residual value is $5,000. The equipment is expected to produce 300,000 units during its life. Required: Calculate depreciation for 2024 and 2025 using each of the following methods. 2. Double-declining-balance. Formula Amount for 2024 Amount for 2025 Double-Declining-Balance Method X X % % = Depreciation Expense =arrow_forwardS10-6 Calculating depreciation by three methods–second year At the beginning of 2017, JetQuick Airlines purchased a used Boeing jet at a cost of $46 million. JetQuick expects the plane to remain useful for eight years (5 million kilometres) and to have a residual value of $6 million. JetQuick expects the plane to be flown for 1.3 million kilometres the first year and 1 million kilometres the second year. Requirements 1 Calculate second-year (2018) depreciation on the plane using the following methods: a straight line b units of production c reducing balance (use 2 x the SL rate). 2 Calculate the balance in Accumulated depreciation at the end of the second year using the straight-line method of depreciation.arrow_forward21. Revision of Depreciation On January 1, 2020, Shapiro Inc. purchased a machine for $115,000. Shapiro depreciated the machine with the straight-line depreciation method over a useful life of 10 years, using a residual value of $5,000. At the beginning of 2022, a major overhaul costing $30,000 was made. After the overhaul, the machine's residual value is estimated to be $7,500, and the machine is expected to have a remaining useful life of 11 years. Required: Determine the depreciation expense for 2022.arrow_forward
- S10-8 Partial-year depreciation On 31 March 2016, Kinko's purchased a copying machine for $80000. Kinko's expects the machine to last for five years and to have a residual value of $8000. Requirement Calculate depreciation on the machine for the year ended 31 December 2016, using the straight-line method.arrow_forwardPlease reject this question E10-6 Kelm Company purchased a new machineon October 1,2008, at a cost of $120.000. the Company estimatedthat the machine will have a salvage value of $12,000. The machine k pected to be used for 10,000 working hours duringíts 5-year life. Instructions Compute the depreciation expense under the following methods for the year indicated. (a) Straight-Ime for 2008. (b) Upils-of-activity for 2008, assuming machine usage was 1,700 hours (c) Đeclining-balance using double the straight-line rate for 2008 and 2009.arrow_forwardExercise 11-11 (Algo) Disposal of property, plant, and equipment; partial periods [LO11-2] On July 1, 2016, Farm Fresh Industries purchased a specialized delivery truck for $131,600. At the time, Farm Fresh estimated the truck to have a useful life of eight years and a residual value of $26,000. On March 1, 2021, the truck was sold for $52,000. Farm Fresh uses the straight-line depreciation method for all of its plant and equipment. Partial-year depreciation is calculated based on the number of months the asset is in service. Required: 1. Prepare the journal entry to update depreciation in 2021. 2. Prepare the journal entry to record the sale of the truck. 3. Assuming that the truck was instead sold for $83,000, prepare the journal entry to record the sale. Complete this question by entering your answers in the tabs below. Req 1 and 2 Prepare the journal entries to update depreciation in 2021 and record the sale of the truck. (If no entry is required for a transaction/event, select "No…arrow_forward
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781305654174/9781305654174_smallCoverImage.gif)