Depreciation for each year using the straight line method

Reference no: EM131134364

Problem 1 - Depreciation

Ace Specialties bought a delivery truck for $40,000 cash. The expected useful life is 5 years and the salvage value is $5,000.

Ace uses a calendar year and the truck was purchased on July 1, 2015.

Calculate the depreciation for each year using the straight line method and the double declining balance method.

Show the journal entry for year one for the double declining balance method.

Straight line method

year	depreciation	remaining book value
2015
2016
2017
2018
2019
2020
2021

Double declining balance method

year	depreciation	remaining book value
2015
2016
2017
2018
2019
2020
2021

Journal Entry

Journal Entry
date	account	debit	credit
12/31/2015

Problem 2 - Below you will see three scenarios for disposal of assets. Prepare the journal entry for each.

On June 1, 2016 Axle Corporation sold a truck for $10,000 cash. The truck originally cost $45,000 and the accumulated depreciation as of May 31, 2016 was 37,600.

On September 1, 2016 Smith Conveyor Corp sold a piece of factory machinery for $12,000. The machine originally cost $52,000 and had accumulated depreciation of $36,500 as of August 31, 2016.

On October 1, 2016 Axle Corporation scraped of a piece of machinery for no proceeds. The machine originally cost $20,000 and had accumulated depreciation of $18,000 as of September 30, 2016.

On November 1, 2016 Smith Conveyor Corp scrapped a piece of machinery for no proceeds. The machine originally cost $22,000 and was fully depreciated.

Problem - Listed below are nine fixed asset transactions. Record the journal entries. Dates and descriptions are not required. The only account titles you will need are listed:

Account titles:

Cash

Land

Land Improvements

Building

Furniture

Expense (determine expense account title)

Prepaid account (determine full account title)

Item 1- Paid $2,500 for one year insurance coverage on equipment

Item 2- Paid $7,500 for trees and shrubs

Item 3- Paid $500 attorney's fees for document preparation related to land purchase

Item 4- Paid $150,000 for land and building. The land was separately valued at $40,000, and the building at $120,000. Hint - the cash is only $150,000 and the entry must balance.

Item 5- Paid $1,000 freight costs on purchase of new furniture

Item 6- Paid $300 for staplers, trash cans, and desktop mats

Item 7- Ordered new $50,000 truck, to be delivered and paid for in the future

Item 8- Paid $10,000 of interest costs on loan on active building construction project

Item 9- Paid $25,000 to expand parking lot paving.

Reference no: EM131134364

Questions Cloud

Write response to the ideas or arguments : Watch one of these TED talks in this playlistWords, Words, Words! (Links to an external site.) - Write response to the ideas / arguments in the talk.

Two different active equity portfolio managers : Consider the annual returns produced by two different active equity portfolio managers (A and B) as well as those to the stock index with which they are both compared:

What if both the labor and the capital stocks are fixed : Suppose output is growing at 3 percent per year and capital's and labor's shares of income are .3 and .7, respectively.

A banker who have access to the above rates : Assume that you are a banker who have access to the above rates. What EUR/USD rate or USD per Ac‚¬ would you quote for an exporter who is interested hedging its EUR100m cash inflows due in three months?

Depreciation for each year using the straight line method : Ace uses a calendar year and the truck was purchased on July 1, 2015. Calculate the depreciation for each year using the straight line method and the double declining balance method

How long will it take for output to double : Now suppose technology grows at a rate of 2 percent. Recalculate your answers to ( a ) and ( b ).

Is evaporation the absorption or release of latent heat : Is evaporation the absorption or release of latent heat? According to the video, what is the common length of storage time for most atmospheric water (rainfall, snowfall) that fall onto land?

Why does the steady state occur where they cross : Figure 3-4 is a basic illustration of the Solow growth model. Interpret it, being careful to explain the meaning of the saving and investment requirement lines. Why does the steady state occur where they cross?

Digby plans to spend an additional : Digby's turnover rate for this year is 6.31%. This rate is projected to remain the same next year and no further downsizing will occur from automating. Digby plans to spend an additional $500 beyond the extra amount above the $1000 recruiting base..

User Account

All Pages