Reference no: EM132620895

Happy Company owned a power plant which consisted of the following assets all acquired at the beginning of current year.

                                          Cost                    Residual value                              Useful life in years

Building                       3,510,000               270,000                                 15

Machinery                   1,188,000                  108,000                                8

Equipment                     702,000                     162,000                              4

Required:

Problem a. Compute the composite rate.

Problem b. Compute the composite life

Problem c. Prepare journal entry to record the depreciation for the current year following the composite method.

Problem d. Prepare journal entry to record the retirement of the machinery at the end of the 5th year assuming the proceeds from retirement amount to 110,000.

Problem e. Prepare journal entry to record the depreciation for the 6th year following the composite method.