Problem 2 James Co. purchased equipment on January 1, 2017 for $1,200,000 cash. The company uses the revaluation model for its equipment. The useful life is 15 years and the residual value is $100,000. On December 31, 2018 and December 31, 2020, the fair value of the equipment was estimated at $1,300,000 and $850,000, respectively. The company uses straight line method of depreciation. Required- Prepare all the journal entries from January 1, 2017, to December 31, 2020 for equipment.

Problem 2 James Co. purchased equipment on January 1, 2017 for $1,200,000 cash. The company uses the revaluation model for its equipment. The useful life is 15 years and the residual value is $100,000. On December 31, 2018 and December 31, 2020, the fair value of the equipment was estimated at $1,300,000 and $850,000, respectively. The company uses straight line method of depreciation. Required- Prepare all the journal entries from January 1, 2017, to December 31, 2020 for equipment.

Name: Problem 2James Co. purchased equipment on January 1, 2017 for $1,200,
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Description: Problem 2James Co. purchased equipment on January 1, 2017 for $1,200,000 cash. The company uses therevaluation model for its equipment. The useful life is 15 years and the residual value is$100,000. On December 31, 2018 and December 31, 2020, the fa

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 11E: On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an...

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On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated life: 5 years Estimated residual value: 3,000 Depreciation method for financial statements: straight-line method Depreciation for income tax purposes: MACRS (3-year life) From 2019 through 2023, each year, Hunter had sales of 100,000, cost of goods sold of 60,000, and operating expenses (excluding depreciation) of 15,000. The truck was disposed of on December 31, 2023, for 2,000. Required: 1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2019 through 2023. 2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2019 through 2023. 3. Compare the total income for all 5 years under Requirements 1 and 2.
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