Concept explainers
1.
Straight-line
Double-declining-balance method: It is an accelerated method of depreciation under which the depreciation declines in each successive year until the value of asset becomes zero. Under this method, the book value (original cost less
To Calculate: the amount of depreciation expense for the computer under straight-line method for the year ended December 31, 2016.
2.
To record: the
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Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
- Depreciation On July 1, 2016, Dexter Corp. buys a computer system for $260,000 in cash. Assume that the computer is expected to have a four-year life and an estimated salvage value of $20,000 at the end of that time. Required Prepare the journal entry to record the purchase of the computer on July 1, 2016. Compute the depreciable cost of the computer. Using the straight-line method, compute the monthly depreciation. Prepare the adjusting entry to record depreciation at the end of July 2016. Compute the computers carrying value that will be shown on Dexters balance sheet prepared on December 31, 2016.arrow_forwardUse the information in Problem A-1 to solve this problem. Assume that the van is five-year property for tax purposes. Required Prepare a schedule of depreciation under MACRS. Round figures to the nearest whole dollar. PROBLEM A-1 A delivery van was bought for 18,000. The estimated life of the van is four years. The trade-in value at the end of four years is estimated to be 2,000. Check Figure Year 3 depreciation, 3,456arrow_forwardUse the information in Problem A-1 to solve this problem. Required Prepare a schedule of depreciation using the double-declining-balance method. PROBLEM A-1 A delivery van was bought for 18,000. The estimated life of the van is four years. The trade-in value at the end of four years is estimated to be 2,000. Check Figure Year 2 depreciation, 4,500arrow_forward
- Calculating and journalizing partial-year depreciation This problem continues the Canyon Canoe Company situation from Chapter 8, Amber and Zack Wilson are continuing to review business practices. Currently, they are reviewing the company’s property, plant, and equipment and have gathered the following information: Requirements Calculate the amount of monthly depreciation expense for the computer and office furniture for 2019. For each asset, determine the book value as of December 31, 2018. Then, calculate the depreciation expense for the first six months of 2019 and the book value as of June 30, 2019. Prepare a partial balance sheet showing Property, Plant, and Equipment as of June 30, 2019.arrow_forwardK Depreciation Norton Systems acquired two new assets. Asset A was research equipment costing $19,000 and having a 3-year recovery period. Asset B was duplicating equipment having an installed cost of $56,000 and a 5-year recovery period. Using the MACRS depreciation percentages, prepare a depreciation schedule for each of these assets. Complete the depreciation schedule for asset A below: Recovery Year 1 ... Depreciation (Round to the nearest dollar.) edit: 0 Qu Quarrow_forwardRequired information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below] NewTech purchases computer equipment for $261,000 to use in operating activities for the next four years at estimates the equipment's salvage value at $30,000. Exercise 8-8 (Algo) Double-declining-balance depreciation LO P1 Prepare a table showing depreciation and book value for each of the four years assuming double-declining balance depreciation, Note: Enter all amounts as positive values. Year Year 1 Year 2 Year 3 Year 4 Total Depreciation for the Period Beginning-Year Depreciation - Book Value Rate Annual thepreciation 3 End of Period Accumulated Depreciation Year-End Book Valusarrow_forward
- Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] NewTech purchases computer equipment for $261,000 to use in operating activities for the next four years. It estimates the equipment's salvage value at $30,000. Exercise 8-7 (Algo) Straight-line depreciation LO P1 Prepare a table showing depreciation and book value for each of the four years assuming straight-line depreciation. Choose Numerator: Year Year 1 Year 2 Year 3 Year 4 Total Straight-Line Depreciation Choose Denominator: Annual Depreciation = = Annual Depreciation Expense Depreciation expense Year-End Book Valuearrow_forwardB. D E G H. J K 3. Create the fixed asset supporting schedule for the following purchases: Two fixed assets are purchased during the year: Computer server on 5/4/2014 for $2,214.55 Office furniture on 11/17/2014 for $1,234.54 MACRS 150% is going to be the depreciation method used and depreciation adjusting entries are made at the end of each month. (check figure: total depreciation expense = 107.63) What will be the depreciation general journal adjusting entry on 12/31/2014?arrow_forwardQuestion 1 On January 1, 2014, Evers Company purchased the following machine for use in its production process: Machine: The recorded cost of this machine was $180,000. Evers estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period. Instructions a) Calculate the amount of depreciation expense that Evers should record each year of its useful life under the following assumptions. Show your workings. (1) Straight-line method (2) Double declining balance method (3) Units-of-activity method and estimates that the useful life of machine is 125,000 units. Actual usage is as follows: 2014, 45,000 units; 2015, 35,000 units; 2016, 25,000 units; 2017, 20,000 units. b) Which method used to calculate depreciation reports the highest amount of depreciation expense year 1? The highest in year 4? The highest total amount over the 4-year period? inarrow_forward
- Depreciation calculation methods Millco, Inc., acquired a machine that cost $1,200,000 early in 2016. The machine is expected to last for eight years, and its estimated salvage value at the end of its life is $180,000. Required: a. Using straight-line depreciation, calculate the depreciation expense to be recognized in the first year of the machine's life and calculate the accumulated depreciation after the fifth year of the machine's life.arrow_forwardRequired information Use the following information for the Exercises below. (The following information applies to the questions displayed below.] On April 1, Cyclone's Co. purchases a trencher for $302,000. The machine is expected to last five years and have a salvage value of $51,000. Exercise 8-12 Double-declining-balance, partlal-year depreciation LO C2 Compute depreciation expense at December 31 for both the first year and second year assuming the company uses the double- declining-balance method. (Enter all amounts as positive values.) Depreciation for the Period End of Period Beginning of Annual Period Period Book Value Depreciation Rate Partial Year Depreciation Expense Accumulated Depreciation Book Value Year 1 Year 2arrow_forwardComputing Straight-Line and Double-Declining-Balance Depreciation On January 2, 2016, Fischer Company purchases a machine that manufactures a part for one of its key products. The machine cost $264,600 and is estimated to have a useful life of six years, with an expected salvage value of $22,500. Compute depreciation expense for 2016 and 2017 for the following depreciation methods. a. Straight-line. b. Double-declining balance. 2016 2017 Straight-ine S 224,250 x S 183,900 x Double dacining 174,636 x 84,672 xarrow_forward
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