Question

A1 x fx B Exercise ! C D E F G Exerdsel Australia Company purchased a machine for $3,200 on September 24th and incurred installation costs of $ 800. The estimated salvage value of the machine is $ 200. The machine has an estimated useful life of four years. Compute the annual depreciation charges for this machine under the double-declining balance method. Exercise Q Malt Creek Inc. purchased some equipment On January 1, 2015 for $32,000. Suppose they sold it for $15,000 on December 31, 2017. Accumulated Depreciation at that time was $24,000. Journalize the sale of the equipment. GENERAL POST REF. Date Account/Description Credit Debit

Answer 1

Exercise-1
Australia Company
Assuming, Dec 31, Year -end
Sep. 24--Cost + installation(3200+800)=	4000
Estimated useful life=	4 yrs.
So, depn. Rate under St.line method of depn.=	1/4=25%p.a.
so, Depn. Rate under Double-declining balance method= 2 times*St.line rate	2*25=50% p.a. on the declining balance ,ie. Carrying value

until the salvage value is reached.
so, drawing a depreciation table,
Year	Annual depn. Charge		Carrying value
Sep.24,Yr.1			4000
Dec 31, Yr.1	4000*50%*99/365=	542.47	3457.53
Dec 31, Yr.2	3457.53*50%=	1728.77	1728.77
Dec 31, Yr.3	1728.77*50%=	864.39	864.38
Dec 31, Yr.4	864.38*50%=	432.19	432.19
Dec 31, Yr.5	432.19*50%=	216.10	216.10
Dec 31, Yr.6		16.1	200.00
		3800.00

Exercise Q
Date	Account/Description	Debit	Credit
Dec 31,2017	Cash	15000
	Accumulated Depreciation	24000
	Equipment		32000
	Gain on sale (15000+24000-32000)		7000

Problem D
	Building a/c					Land & land improvements a/c
May 5,2009	Cost of land & building purchased	200000			Jan 5,2010	Transfer from Building a/c(as per minutes)	32000
	Broker fees	12000			Aug 10.2010	Cost of building parking lots	4960
Jan 3,2010	Contract price of new wing	84000			Dec 31,2010	Balance in Land a/c		36960
Jan 5,2010	Transfer to land a/c(as per minutes)		32000
	Lease rental incomes		8000
Dec 31,2010	Balance in building a/c		256000
	Machinery a/c					Repairs & maintenance a/c
Jan 15,2010	Cost of new m/c	160000			Jun 10.2010	Real estate taxes	36000
Dec 31,2010	Balance		160000		Sep 6,2010	Replacement of broken windows	160
					Oct 10,2010	Repairs due to regular usage	2240
					Dec 31,2010	Balance		38400

Problem E	Journal entries on Dec 31	Debit	Credit
1	Amortisation expense-Patents	6000
	Accumulated Amortisation		6000
	(30000/5)
2	Deferred revenue expense(temporary asset)	6000
	Research expense		6000
	(12000/2)
3
4	Copyright expenses	10000
	Copyright		10000
	(to be expenses fully )