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Recording Entries Using Composite Depreciation Method California Utilities owns a power plant that consists of the following

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Answer #1

a.
Straight line Depreciation = (Original Value - Salvage Value) / Useful life
Total depreciation expense for 2020 = ($900000-30000) / 30 + 285000 / 10 + ($150000-15000) / 6 = $80,000

b.
Total Assets = $900000+285000+150000 = $1335000
Total Residual Value = $30000+15000 = $45000

Composite Depreciation Rate = $80000 / (1335000-45000) = 6.20%
Composite life = 100 / 6.20 = 16.13 years

c.

Account Titles Debit Credit
Depreciation Expense $           80,000
       Accumulated Depreciation $            80,000

d.

Account Titles Debit Credit
Cash $           18,000
Accumulated Depreciation $           90,000
Depreciation Expense $           42,000
         Other Equipment $          150,000

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