Prepare the journal entries to record the depreciation

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Question - On March 31, 2021, the Herzog Company purchased a factory complete with vehicles and equipment. The allocation of the total purchase price of $940,000 to the various types of assets along with estimated useful lives and residual values are as follows:

Asset Cost Estimated Residual Value Estimated Useful Life (in years)

Land $130,000 N/A N/A

Building 440,000 none 25

Equipment 240,000 12% of cost 8

Vehicles 130,000 $13,000 10

Total $940,000

On June 29, 2022, equipment included in the March 31, 2021, purchase that cost $94,000 was sold for $74,000. Herzog uses the straight-line depreciation method for building and equipment and the double-declining-balance method for vehicles. Partial-year depreciation is calculated based on the number of months an asset is in service.

Required -

1. Compute depreciation expense on the building, equipment, and vehicles for 2021.

2. Prepare the journal entries to record the depreciation on the equipment sold on June 29, 2022, and the sale of equipment.

3. Compute depreciation expense on the building, remaining equipment, and vehicles for 2022.

Reference no: EM132707786

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