1.
Machine A | Machine B | Machine C | |
Cost of Asset | $ 9,000.00 | $ 38,200.00 | $ 22,000.00 |
Installation Costs | $ 800.00 | $ 2,100.00 | $ 1,200.00 |
Renovation Costs | $ 600.00 | $ 1,700.00 | $ 2,200.00 |
Total Cost of Machine | $ 10,400.00 | $ 42,000.00 | $ 25,400.00 |
Depreciation | $ 2,350.00 | $ 10,000.00 | $ 5,080.00 |
Calculation | =(10400-1000)/4 | =(42000-4500)/30000*8000 | =25400*10%*2 |
Straight Line Depreciation = (Original Value - Salvage Value) /
Useful Life
Units of Production Depreciation = (Original Value - Salvage Value)
x Units of Production for year / Total units of production
Double Declining Balance Depreciation = Beginning Book Value x 2
times Straight Line Depreciation rate
*Straight line Depreciation rate = 1/10 x 100 = 10%
Particulars | Debit | Credit |
Depreciation Expense | $ 17,430.00 | |
Accumulated Depreciation - Machine A | $ 2,350.00 | |
Accumulated Depreciation - Machine B | $ 10,000.00 | |
Accumulated Depreciation - Machine C | $ 5,080.00 |
2.
Date | Particulars | Debit | Credit |
Jan-01 | No Journal Entry for Depreciation | ||
Jan-01 | Cash | $ 9,000.00 | |
Accumulated Depreciation - Machine A | $ 21,600.00 | ||
Machine A | $ 30,000.00 | ||
Gain on Disposal | $ 600.00 | ||
Jan-01 | No Journal Entry for Depreciation | ||
Jan-01 | Accumulated Depreciation - Machine A | $ 44,000.00 | |
Loss on Disposal | $ 15,200.00 | ||
Machine B | $ 59,200.00 |
3.
Date | Particulars | Debit | Credit |
Jan-02 | Bulldozer | $ 250,000.00 | |
Cash | $ 20,000.00 | ||
Note due | $ 230,000.00 | ||
Jan-03 | Bulldozer | $ 20,000.00 | |
Accounts Payable | $ 20,000.00 | ||
Jan-30 | Accounts Payable | $ 20,000.00 | |
Cash | $ 20,000.00 | ||
Feb-01 | Repair and maintenance | $ 800.00 | |
Cash | $ 800.00 | ||
Mar-01 | Computer Software | $ 3,600.00 | |
Cash | $ 3,600.00 |
Value of Bulldozer = $250000 + $20000 = $270000
Value of $20000 is capitalized as it increases the operating
effectiveness of the bulldozer, whereas new seat doesnot increase
its efficiency, therefore $800 is not capitalized
Double Declining Balance Depreciation = Beginning Book
Value/Asset Cost x 2 times Depreciation rate
Straight line depreciation rate = 1/5 x 100 = 20%
Depreciation = $270000 x 40% x 1/4 = $27000
1/4 used for depreciation for 1 quarter
Amortization = $3600 / 2 x 1/12 = $150
Date | Particulars | Debit | Credit |
Mar-31 | Depreciation Expense | $ 27,000.00 | |
Accumulated Depreciation - Bulldozer | $ 27,000.00 | ||
Mar-31 | Amortization Expense | $ 150.00 | |
Accumulated Amortization | $ 150.00 |
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