Fundamentals Of Financial Accounting
6th Edition
ISBN: 9781259864230
Author: PHILLIPS, Fred, Libby, Robert, Patricia A.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 9, Problem 8E
To determine
The useful life of asset from straight-line depreciation method
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
On January 1, the records of Tasty Treats Corporation (TTC) showed the following regarding production equipment:Equipment (estimated residual value, $4,000) $16,000Accumulated Depreciation (straight-line, one year) 2,000Required:Based on the data given, compute the estimated useful life of the equipment.
Equipment was acquired at the beginning of the year at a cost of $562,500. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $47,675.
Question Content Area
a.  What was the depreciation for the first year? Round your answer to the nearest cent.$fill in the blank 0c4447fd4012faf_1
b.  Using the rounded amount from Part a in your computation, determine the gain or loss on the sale of the equipment, assuming it was sold at the end of year eight for $98,318. Round your answer to the nearest cent. Enter your answer as a positive amount.$fill in the blank 0c4447fd4012faf_2Â
Â
Â
Question Content Area
c.  Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent.
Â
Â
Cash
Â
Â
Â
Accumulated Depreciation-Equipment
Â
Â
Â
Loss on Sale of Equipment
Â
Â
Â
Equipment
Hilarious Company provided the following data pertaining to machinery on the date of revaluation:
CostReplacement cost
Machinery 4, 500, 000 7, 200, 000
Accumulated depreciation   900, 000
Age of asset   3 years
Revised Life of the asset 10 years
Â
Required:
Appreciation or revaluation increase
Carrying amount
Depreciated replacement cost
Revaluation surplus
What is the original life of the asset?
Prepare the journal entry to record the revaluation
Prepare the entry to record the annual depreciation subsequent to revaluation
Prepare the entry to record the piecemeal realization of the revaluation surplus
Chapter 9 Solutions
Fundamentals Of Financial Accounting
Ch. 9 - Define long-lived assets. What are the two common...Ch. 9 - Under the cost principle, what amounts should be...Ch. 9 - What is the term for recording costs as assets...Ch. 9 - 4. Waste Management, Inc., regularly incurs costs...Ch. 9 - Distinguish between ordinary repairs and...Ch. 9 - Describe the relationship between the expense...Ch. 9 - Why are different depreciation methods allowed?Ch. 9 - In computing depreciation, three values must be...Ch. 9 - Prob. 9QCh. 9 - After merging with Northwest Airlines, Delta...
Ch. 9 - A local politician claimed, to reduce the...Ch. 9 - What is an asset impairment? How is it accounted...Ch. 9 - What is book value? When equipment is sold for...Ch. 9 - Prob. 14QCh. 9 - Prob. 15QCh. 9 - FedEx Corporation reports the cost of its aircraft...Ch. 9 - Prob. 17QCh. 9 - Prob. 18QCh. 9 - (Supplement 9A) How does depletion affect the...Ch. 9 - (Supplement 9B) Over what period should an...Ch. 9 - Prob. 1MCCh. 9 - Prob. 2MCCh. 9 - Prob. 3MCCh. 9 - A company wishes to report the highest earnings...Ch. 9 - Barber, Inc., depreciates its building on a...Ch. 9 - Thornton Industries purchased a machine on July 1...Ch. 9 - ACME. Inc., uses straight-line depreciation for...Ch. 9 - What assets should be amortized using the...Ch. 9 - Prob. 9MCCh. 9 - The Simon Company and the Allen Company each...Ch. 9 - Classifying Long-Lived Assets and Related Cost...Ch. 9 - Prob. 2MECh. 9 - Prob. 3MECh. 9 - Computing Book Value (Straight-Line Depreciation)...Ch. 9 - Computing Book Value (Units-of-Production...Ch. 9 - Computing Book Value (Double-Declining-Balance...Ch. 9 - Calculating Partial-Year Depreciation Calculate...Ch. 9 - Recording Asset Impairment Losses After recording...Ch. 9 - Recording the Disposal of a Long-Lived Asset...Ch. 9 - Reporting and Recording the Disposal of a...Ch. 9 - Prob. 11MECh. 9 - Prob. 12MECh. 9 - Computing and Evaluating the Fixed Asset Turnover...Ch. 9 - (Supplement 9A) Recording Depletion for a Natural...Ch. 9 - Prob. 15MECh. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 - Determining Financial Statement Effects of an...Ch. 9 - Prob. 4ECh. 9 - Determining Financial Statement Effects of...Ch. 9 - Computing Depreciation under Alternative Methods...Ch. 9 - Computing Depreciation under Alternative Methods...Ch. 9 - Prob. 8ECh. 9 - Demonstrating the Effect of Book Value on...Ch. 9 - Evaluating the Impact of Estimated Useful Lives of...Ch. 9 - Calculating the Impact of Estimated Useful Lives...Ch. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Computing and Interpreting the Fixed Asset...Ch. 9 - Computing Depreciation and Book Value for Two...Ch. 9 - Prob. 16ECh. 9 - Prob. 17ECh. 9 - Computing Acquisition Cost and Recording...Ch. 9 - Prob. 2CPCh. 9 - Analyzing and Recording Long-Lived Asset...Ch. 9 - Computing Acquisition Cost and Recording...Ch. 9 - Recording and Interpreting the Disposal of...Ch. 9 - Prob. 3PACh. 9 - Prob. 4PACh. 9 - Computing Acquisition Cost and Recording...Ch. 9 - Recording and Interpreting the Disposal of...Ch. 9 - Analyzing and Recording Long-Lived Asset...Ch. 9 - Prob. 4PBCh. 9 - Accounting for Operating Activities (Including...Ch. 9 - Prob. 1SDCCh. 9 - Prob. 2SDCCh. 9 - Ethical Decision Making: A Mini-Case Assume you...Ch. 9 - Critical Thinking: Analyzing the Effects of...Ch. 9 - Prob. 7SDCCh. 9 - Accounting for the Use and Disposal of Long-Lived...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A machine costing 350,000 has a salvage value of 15,000 and an estimated life of three years. Prepare depreciation schedules reporting the depreciation expense, accumulated depreciation, and book value of the machine for each year under the double-declining-balance and sum-of-the-years-digits methods. For the double-declining-balance method, round the depreciation rate to two decimal places.arrow_forwardWhen depreciation is recorded each period, what account is debited? a. Depreciation Expense b. Cash c. Accumulated Depreciation d. The fixed asset account involved Use the following information for Multiple-Choice Questions 7-4 through 7-6: Cox Inc. acquired a machine for on January 1, 2019. The machine has a salvage value of $20,000 and a 5-year useful life. Cox expects the machine to run for 15,000 machine hours. The machine was actually used for 4,200 hours in 2019 and 3,450 hours in 2020.arrow_forwardEquipment was acquired at the beginning of the year at a cost of $75,720. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,920. Required: a.  What was the depreciation expense for the first year? b.  Assuming the equipment was sold at the end of the second year for $57,370, determine the gain or loss on sale of the equipment. c.  Journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles.   Chart of Accounts   CHART OF ACCOUNTS  General Ledger  ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Inventory 117 Supplies 119 Prepaid Insurance 120 Land 121 Equipment 122 Accumulated Depreciation 132 Goodwill 133 Patents  LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214…arrow_forward
- Comparing Theee Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $233,400. The equipment was expected to have a useful ife of three years, or 6,300 operating hours, and a residual value of $19,200. The equipment was used for 2,520 hours during Year 1, 1,953 hours in Year 2, and 1,827 hours in Year 3. Required: 1. Determine the amount of depreciation expense for the three years ending December 31, Year 1, Year 2, Vear 3, by (a) the straight-ine method, (b) the unite-of- activity method, and (e) the double-decining-balance method, Also determine the total depreciation expense for the three years by each method. Note: For all methods, round the answer for each year to the nearest whole dollar. Depreciation Expense Straight-Line Nethod Units-of-Activity Method Double-Declining-Balance Method Year Year 1 Year 2 Year 3 Total 2. What method yields the highest depreciation expense for Year 17 3. What method ylelds the most depreciation over the three-year…arrow_forwardInstructions Equipment was acquired at the beginning of the year at a cost of $637,500. The equipment was depreciated using the double-declining-balance method based on an estimated useful life of 9 years and an estimated residual value of $43,195. Required: a. What was the depreciation for the first year? Round your intermediate calculations to 4 decimal places. Round the depreciation for the year to the nearest whole dollar. b. Assuming that the equipment was sold at the end of the second year for $631,697 determine the gain or loss on the sale of the equipment Journalize the entry on Dec. 31 to record the sale. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal SAMSUNG PreviouS Nextarrow_forwardA truck acquired at a cost of $465,000 has an estimated residual value of $27,900, has an estimated useful life of 62,000 miles, and was driven 4,300 miles during the year. Determine the following. If required, round your answer for the depreciation rate to two decimal places. a. The depreciable cost   b. The depreciation rate  per mile c. The units-of-activity depreciation for the yeararrow_forward
- Calculate the amount of depreciation to report during the year ended December 31 for equipmentthat was purchased at a cost of $43,000 on October 1. The equipment has an estimated residualvalue of $3,000 and an estimated useful life of five years or 20,000 hours. Assume the equipmentwas used for 1,000 hours from October 1 to December 31 and the company uses ( a ) straight-line,( b ) double-declining-balance, or ( c ) units-of-production depreciation.arrow_forwardEndblast Productions showed the following selected asset balances on December 31, 2023: Land Building Accumulated depreciation, building¹ Equipment Accumulated depreciation, equipment² $476,800 606,400 425,600 211, 200 72,000 ¹Remaining estimated useful life is eight years with a residual value of $40,000; depreciated using the straight-line method to the nearest whole month. 2Total estimated useful life is 10 years with a residual value of $24,000; depreciated using the double-declining-balance method to the nearest whole month. Required: Prepare the entries for each of the following. (Round intermediate calculations to the nearest whole dollar.) 1. The land and building were sold on September 27, 2024, for $655,000 cash. View transaction listarrow_forwardCalculate the amount of depreciation to report during the year ended December 31 for equipment that was purchased at a cost of $84,000 on October 1. The equipment has an estimated residual value of $4,000 and an estimated useful life of five years or 20,000 hours. Required: Assume the equipment was used for 1,000 hours from October 1 to December 31 and the company uses (a) straight-line, (b) double- declining-balance, or (c) units-of-production depreciation. (Do not round intermediate calculations.) (a) Straight-Line (b) Double-Declining-Balance (c) Units-of-Production Depreciationarrow_forward
- A truck acquired at a cost of $375,000 has an estimated residual value of $21,600, has an estimated useful life of 38,000 miles, and was driven 2,700 miles during the year. Determine the following. If required, round your answer for the depreciation rate to two decimal places (a) The depreciable cost (b) The depreciation rate (c) The units-of-activity depreciation for the yeararrow_forwardEquipment acquired on January 8, 20Y1, at a cost of $675,000, has an estimated useful life of 17 years and an estimated residual value of $135,000. What was the annual amount of depreciation for the years 20Y1, 20Y2, and 20Y3, using the straight-line method of depreciation? Round annual depreciation to the nearest dollar and use this amount in your follow-on calculations. Depreciation expense 20Y1$ 20Y2$ 20Y3$arrow_forwardEquipment was acquired at the beginning of the year at a cost of $78,660. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,920. Required: (a)  What was the depreciation expense for the first year? (b)  Assuming the equipment was sold at the end of the second year for $59,486, determine the gain or loss on sale of the equipment. (c)  Journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles. CHART OF ACCOUNTSGeneral Ledger  ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Supplies 119 Prepaid Insurance 120 Land 121 Equipment 122 Accumulated Depreciation 132 Goodwill 133 Patents  LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Accounting for Derivatives_1.mp4; Author: DVRamanaXIMB;https://www.youtube.com/watch?v=kZky1jIiCN0;License: Standard Youtube License
Depreciation|(Concept and Methods); Author: easyCBSE commerce lectures;https://www.youtube.com/watch?v=w4lScJke6CA;License: Standard YouTube License, CC-BY