The December 31, 2019 balance sheet of Frost Company showed the following balances: | ||||
Truck | 90,000 | |||
Accumulated depreciation: truck | 38,000 |
On January 1, 2020, after a slight mishap, the company revises the estimates on this truck. | ||||
Revised remaining useful life | 2 | years | ||
Revised salvage value | 1,000 | |||
INSTRUCTIONS: Compute the revised annual depreciation expense for this equipment. |
On October 1, 2019, Beaufort Mining Inc. purchased a new mine. | ||||
Cost of the mine | 640,000 | |||
Estimated tons of ore in this mine | 500,000 | tons | ||
Ore mined and sold during 2017 | 80,000 | tons | ||
INSTRUCTIONS: Prepare the journal entry to record depletion expense for 2019 | ||||
GENERAL JOURNAL | ||||
Date | Account Title | DEBIT | CREDIT | |
Book value of Truck = Cost price – Accumulated depreciation
= 90,000 - 38,000
= $52,000
New depreciable cost = Book value of Truck – Revised residual value
= 52,000 - 1,000
= $51,000
Revised annual depreciation = New depreciable cost/Remaining useful life
= 51,000/2
= $25,500
Next question
Cost of the mine = $640,000
Estimated tons of ore in this mine = 500,000 tons
Ore mined and sold during 2019 = 80,000 tons
Depletion expense per ton = Cost of the mine/Estimated tons of ore
= 500,000/640,000
= $0.78125
Depletion expense for 2019 = Depletion expense per ton x Ore mined and sold during 2019
= 0.78125 x 80,000
= $62,500
Journal
Dec. 31, 2019 | Depletion expense | 62,500 | |
Accumulated depletion - Ore mine | 62,500 |
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The December 31, 2019 balance sheet of Frost Company showed the following balances: Truck 90,000...
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