Question

On March 31, 2021, the Herzog Company purchased a factory complete with vehicles and equipment. The allocation of the total purchase price of $960,000 to the various types of assets along with estimated useful lives and residual values are as follows:

Asset	Cost				Estimated Residual Value				Estimated Useful Life (in years)
Land	$	120,000				N/A			N/A
Building		460,000				none			25
Equipment		260,000				10% of cost			6
Vehicles		120,000			$	15,000			10
Total	$	960,000

On June 29, 2022, equipment included in the March 31, 2021, purchase that cost $96,000 was sold for $76,000. Herzog uses the straight-line depreciation method for building and equipment and the double-declining-balance method for vehicles. Partial-year depreciation is calculated based on the number of months an asset is in service.

Required:

1. Compute depreciation expense on the building, equipment, and vehicles for 2021.
2. Prepare the journal entries to record the depreciation on the equipment sold on June 29, 2022, and the sale of equipment.
3. Compute depreciation expense on the building, remaining equipment, and vehicles for 2022.

Answer 1

- Annwer al. Depreciation Expense on Brilling timest oot vehicle Bulling $460000 25 years x 9 $ 18800 for 9 months - Equipment = $(260000 - 10% of 26000) - 6 years $29250 fov 9 months hiches = 2X $ (20000 - 10 years $ for 18000 9 months (2) Journal Equies to on June 29, 2012 second and depteciation of equipment the sale of equipment sold. Depreciation Expense - 96000 - (10% Of 96000 x 6 Gyears & 7200 for 6 months. Accumulated Deprecqhon on Machine (Equipment) sold Tyne 29, 2022 on 2021 Depreciation : $ 96000 - 610% of grox 10800 Gjequs = 2022 Depreciation 7200 18000 Joyanal Entry to record Depreciation Expense and sale G) Depreciation Alt or 7200 To Accumulated depreciation Ac 7200 word depieclytion expense of tyyipment)

Y. qih Alc Accumulated Depreciation Alc_ To Equipment Als (Being Equipment rold) DX 76000 18000 96000 (3 Deprecation Expense on building , equipment and vehicles for 2012 guilding = $460000 25 years $ 18400 Equipment = $ (260000 - 96000) - 10% of C 164000) 6 yearst - $ 24600 I vehicle = & 20400 $(120000 18000 x 2x1 10 years