Question

Ocean Fishers Ltd had a 22.foot fishing boat with an inboard motor that was purchased on April 9. 2009. for $121,500. The PPE Sub lodger shows the following information regarding the boat Fishing Boat - 22 Foot Wohnboard Motor: Component Date of Depec Purchase Method Fibreglass body Apr. 9700 SL Apr 09 Cost 5 46.500 $9.000 Estule 15 y $121.500 On June 27, 2017. $81.000 cash was paid for a new motor to replace the old one, which was scrapped. The new motor had an estimated useful le of 12 years and a residual value of $6.000. Early in 2017, was determined that the useful We of the boat's fibreglass body should be adjusted to a total of 20 years with no change in the residual value Required: 1. Record the appropriate entries regarding the a. Purchase of the replacement motor on June 27, 2017. (If no entry is required transaction, select "No journal entry required in the first account field.) View transaction list Vien Journal entry worksheet Debit Credit No Date June 27, 2017 General Journal Depreciation expense Boat-Motor Accumulated depreciation Boot - Motor 3.750 June 27, 2017 Boat - Motor new Accurate de ration Boat Motor

Answer 1

Debit Credit 40 41 42 43 44 Date General Journal 2017 27-Jun Depreciation Expense, Boat - Motor (75000-0)/10*6/12 Accumulated Depreciation ,Boat - Motor 3,750 3,750 Cost of the Boat Less Accumulated Depreciation Loss on Disposal 75000 61875 (75000/10)*9/12+(75000/10)*7+3750 13125 45 27-Jun Boat - Motor (New) Accumulated Depreciation, Boat - Motor Loss on Disposal Cash Boat - Motor (old) 81000 61875 13125 81000 75000 5078 31-Dec Depreciation Expense-Boat Accumulated Depreciation - Boat (81000-6000)/12*6/12+1406*6/12+1250 5,078 Cost Price of Fibreglass body Less Salvage Value Depreciable Value (A) Number of Years of Life (B) Depreciation Amount (A/B) 46,500 (9,000) 37,500 2,500 Depreciation expense for 2009 (2500*9/12) Depreciation expense for 7 Years (2500*7) Depreciation expense for Half Year (2500 *6/12) Accumulated Depreciation upto 30th June 2017 1,875 17,500 1,250 20,625

Cost of the Boat Less Accumulated Depreciation Book Value as on June 30,2017 46,500 20,625 25875 Now, the life of the body has increased to 20 Years and depreciation has already been charged for 8.5 Years accordingly Book Value of Fibreglass body Less Salvage Value Depreciable Value (A) Number of Years of Life (B) Depreciation Amount (A/B) 25,875 (9,000) 16,875 12 1,406 Depreciation expense for 2017 8,828

Cost of the Boat Less Accumulated Depreciation Book Value as on June 30,2017 46,500 20,625 25875 Now, the life of the body has increased to 20 Years and depreciation has already been charged for 8.5 Years accordingly Book Value of Fibreglass body Less Salvage Value Depreciable Value (A) Number of Years of Life (B) Depreciation Amount (A/B) 25,875 (9,000) 16,875 11.5 1,467 80 Depreciation expense for 2017 8,859 81