Intermediate Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (2nd Edition)
2nd Edition
ISBN: 9780134833118
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 11, Problem 11.6P
Disposals of Long-Term Operating Assets—Analysis,
| Balance Sheet Category | Cost | Accumulated Depreciation Through 12/31/2018 |
Estimated Useful Life (Years) |
Estimated Residual Value |
Depreciation Method |
| Equipment | $ 500,000 | $ 180,000 | 10 | $ 50,000 | Double-declining balance |
| Machinery | 345,500 | 170,000 | 8 | 5,500 | Straight line |
| Vehicles | 127,900 | 75,000 | 5 | 2,900 | Straight line |
| Leasehold Improvements |
65,400 | 21,800 | 3 | 0 | Straight line |
| Building | 12,000,000 | 3,252,000 | 20 | 1,500,000 | Straight line |
| Land | 4,560,000 | N/A | N/A | N/A | N/A |
The fiscal year-end of the company is December 31. The following events occurred during 2019:
- 1. On February 1, Rivera sold the vehicles to Wholesale Produce, Inc. for $15,000
- 2. On March 31, all of Rivera’s equipment and machinery was destroyed by a fire in one of its facilities.
- 3. On May 1, the equipment was replaced at a cost of $625,000, and the machinery cost the company $420,000 to replace. The estimated useful lives and residual values remained the same as specified for the original machinery and equipment. The company paid cash
Required
- a. Prepare the
journal entries required to record each of those events and to record depreciation expense at the end of the year. - b. Determine the ending net book value of Rivera’s long-term operating assets on its December 31, 2019, balance sheet. Show the balance for each asset individually and in total.
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Recording and Reporting a Change in Depreciation Estimate
Bellico Company, which has a calendar fiscal year, purchased its only depreciable plant asset on January 1, 2019, and depreciates it using the following information.
Original cost
$12,000
Estimated residual value
1,200
Estimated useful life
Three years
Depreciation method
Sum-of-years’-digits
In 2020, Bellico increased the estimated residual value to $2,400 and increased the total estimated useful life to five years for financial accounting purposes. Additional information follows.
Item
2019
2020
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$48,000
$60,000
Expenses other than depreciation and tax
30,000
36,000
Tax rate
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a. Provide the 2019 entry for depreciation and the ending 2019 accumulated depreciation balance.
Date
Account Name
Dr.
Cr.
Dec. 31, 2019
Answer
Answer
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Accumulated depreciation, December 31, 2019
Answer
b. Provide the 2020 entry for depreciation and the ending…
Help me
At December 31, 2018 Weber Inc.'s balance sheet showed plant and equipment information as detailed in the schedule below. Weber Inc. calculates depreciation to the nearest whole month.
Please complete the schedule. Round depreciation per unit of production to the nearest cent.
Cost Information
Description Purchase Date Depreciation Method Cost Salvage Value Life
Double-declining-
Machinery May 2, 2018
240,000 10,000 10 years
balance
Depreciation
Accum. Dep. Dec. Dep. Expense Accum. Dep. Dec.
31, 2018
for 2019
31, 2019
There have been no disposals or subsequent capital expenditures on the asset since the date of purchase.
For simplicity, assume that the asset is depreciated as an individual item and will not be broken down into parts and depreciated.
Chapter 11 Solutions
Intermediate Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (2nd Edition)
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