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Recording Entries Using Group Depreciation Method Ohio Company owns 10 warehouses of similar type except for varying size. The group system of depreciation is applied to the 10 warehouses, and the rate is 6% each year on cost. At the end of 2020, the asset account, Warehouses, showed a balance of $10,600,000 (residual value $600,000), and the Accumulated Depreciation account showed a balance of $4,800,000. At the start of 2021, Warehouse #8, costing $800,000, was torn down. Materials salvaged from...
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Recording Entries for Equity Investment: Equity Method On January 1, 2020, Mercedez Company purchased 360 of the 900 outstanding shares of Auto Supplies Inc. for $36,000. At that date, the balance sheet of Auto Supplies Inc. showed the following values. Assets not subject to depreciation Assets subject to depreciation Liabilities Common stock (par $1) Retained earnings $36.000 * 23,400 ** 5,400 * 45,000 9,000 * Same as fair value. ** Fair value $27,000; the assets have a 10-year remaining useful...
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Recording Entries Using Composite Depreciation Method California Utilities owns a power plant that consists of the following assets, all acquired on January 1, 2020. Estimated Estimated Residual Life Cost Value (Years) Building $900,000 $30,000 30 Machinery 285,000 10 Other equipment 150,000 15,000 0 a. Compute the total straight-line depreciation for 2020 on all items combined. Total depreciation expense for 2020 $ b. Compute the composite depreciation rate (based on cost) and the composite life of the plant. Note: Round both...
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Recording Entries Using Composite Depreciation Method California Utilities owns a power plant that consists of the following assets, all acquired on January 1, 2020. Estimated Estimated Residual Life Cost Value (Years) Building $120,000 $4,000 30 Machinery 38,000 10 Other equipment 20,000 2,000 6 0 a. Compute the total straight-line depreciation for 2020 on all items combined. Total depreciation expense for 2020 $ 10,667 b. Compute the composite depreciation rate (based on cost) and the composite life of the plant. Note:...
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Recording Entries Using Composite Depreciation Method California Utilities owns a power plant that consists of the following assets, all acquired on January 1, 2020. Estimated Estimated Residual Life Cost Value (Years) Building $120,000 $4,000 30 Machinery 38,000 10 Other equipment 20,000 2,000 6 0 a. Compute the total straight-line depreciation for 2020 on all items combined. Total depreciation expense for 2020 $ 1,335,000 * b. Compute the composite depreciation rate (based on cost) and the composite life of the plant....
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Recording Entries Using Composite Depreciation Method California Utilities owns a power plant that consists of the following assets, all acquired on January 1, 2020. Estimated Estimated Residual Life Cost Value (Years) Building $120,000 $4,000 30 Machinery 38,000 0 10 Other equipment 20,000 2,000 6 a. Compute the total straight-line depreciation for 2020 on all items combined. Total depreciation expense for 2020 $ 10,667 b. Compute the composite depreciation rate (based on cost) and the composite life of the plant. Note:...
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Recording Entries for Long-Term Note Receivable; Effective-Interest Method On January 1, 2020, Jacobs Company sells land financed through a $72,000 note, issued by Andress Company. The note is a $72,000, 5%, annual interest-bearing note. Andress agrees to repay $72,000 proceeds on December 31, 2021. The prevailing interest rate on similar notes is 6%. Assume that the cost of the land is equal to the fair value of the note. Required Prepare all entries for Jacobs over the note term, including...
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Recording Fixed Asset Disposal Manchester Company sells equipment on June 1, 2021, for $250,200 cash. Manchester incurred $1,440 of removal and selling costs on disposal. The equipment cost $450,000 when it was purchased on January 2, 2018. Its estimated residual value and useful life were $72,000 and 10 years, respectively. Manchester uses straight-line depreciation and records annual depreciation on each December 31. a. Prepare the journal entries needed to record the asset disposal on June 1, 2021. b. Record the...
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Recording Purchase of Equipment through Debt and Equity On January 1, 2020, Sidelines Company purchases equipment with an estimated 6-year useful life by making a $5,600 cash payment and issuing a noninterset-bearing note for $19,200 due in two years. The fair value of the the equipment is unknown. An 11% annual interest rate is typical of this transaction. The company uses the effective interest method to amortize interest expense and the straight-line method to estimate depreciation expense. a. Prepare the...
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Recording Fixed Asset Disposal Manchester Company sells equipment on June 1, 2021, for $194,600 cash. Manchester incurred $1,120 of removal and selling costs on disposal. The equipment cost $350,000 when it was purchased on January 2, 2018. Its estimated residual value and useful life were $56,000 and 10 years, respectively. Manchester uses straight-line depreciation and records annual depreciation on each December 31. a. Prepare the journal entries needed to record the asset disposal on June 1, 2021. b. Record the...
Recording Entries Using Group Depreciation Method Ohio Company owns 10 warehouses of similar type except for varying size. The group system of depreciation is applied to the 10 warehouses, and the rate is 6% each year on cost. At the end of 2020, the asset account, Warehouses, showed a balance of $10,600,000 (residual value $600,000), and the Accumulated Depreciation account showed a balance of $4,800,000. At the start of 2021, Warehouse #8, costing $800,000, was torn down. Materials salvaged from...
Recording Entries for Equity Investment: Equity Method On January 1, 2020, Mercedez Company purchased 360 of the 900 outstanding shares of Auto Supplies Inc. for $36,000. At that date, the balance sheet of Auto Supplies Inc. showed the following values. Assets not subject to depreciation Assets subject to depreciation Liabilities Common stock (par $1) Retained earnings $36.000 * 23,400 ** 5,400 * 45,000 9,000 * Same as fair value. ** Fair value $27,000; the assets have a 10-year remaining useful...
Recording Entries Using Composite Depreciation Method California Utilities owns a power plant that consists of the following assets, all acquired on January 1, 2020. Estimated Estimated Residual Life Cost Value (Years) Building $900,000 $30,000 30 Machinery 285,000 10 Other equipment 150,000 15,000 0 a. Compute the total straight-line depreciation for 2020 on all items combined. Total depreciation expense for 2020 $ b. Compute the composite depreciation rate (based on cost) and the composite life of the plant. Note: Round both...
Recording Entries Using Composite Depreciation Method California Utilities owns a power plant that consists of the following assets, all acquired on January 1, 2020. Estimated Estimated Residual Life Cost Value (Years) Building $120,000 $4,000 30 Machinery 38,000 10 Other equipment 20,000 2,000 6 0 a. Compute the total straight-line depreciation for 2020 on all items combined. Total depreciation expense for 2020 $ 10,667 b. Compute the composite depreciation rate (based on cost) and the composite life of the plant. Note:...
Recording Entries Using Composite Depreciation Method California Utilities owns a power plant that consists of the following assets, all acquired on January 1, 2020. Estimated Estimated Residual Life Cost Value (Years) Building $120,000 $4,000 30 Machinery 38,000 10 Other equipment 20,000 2,000 6 0 a. Compute the total straight-line depreciation for 2020 on all items combined. Total depreciation expense for 2020 $ 1,335,000 * b. Compute the composite depreciation rate (based on cost) and the composite life of the plant....
Recording Entries Using Composite Depreciation Method California Utilities owns a power plant that consists of the following assets, all acquired on January 1, 2020. Estimated Estimated Residual Life Cost Value (Years) Building $120,000 $4,000 30 Machinery 38,000 0 10 Other equipment 20,000 2,000 6 a. Compute the total straight-line depreciation for 2020 on all items combined. Total depreciation expense for 2020 $ 10,667 b. Compute the composite depreciation rate (based on cost) and the composite life of the plant. Note:...
Recording Entries for Long-Term Note Receivable; Effective-Interest Method On January 1, 2020, Jacobs Company sells land financed through a $72,000 note, issued by Andress Company. The note is a $72,000, 5%, annual interest-bearing note. Andress agrees to repay $72,000 proceeds on December 31, 2021. The prevailing interest rate on similar notes is 6%. Assume that the cost of the land is equal to the fair value of the note. Required Prepare all entries for Jacobs over the note term, including...
Recording Fixed Asset Disposal Manchester Company sells equipment on June 1, 2021, for $250,200 cash. Manchester incurred $1,440 of removal and selling costs on disposal. The equipment cost $450,000 when it was purchased on January 2, 2018. Its estimated residual value and useful life were $72,000 and 10 years, respectively. Manchester uses straight-line depreciation and records annual depreciation on each December 31. a. Prepare the journal entries needed to record the asset disposal on June 1, 2021. b. Record the...
Recording Purchase of Equipment through Debt and Equity On January 1, 2020, Sidelines Company purchases equipment with an estimated 6-year useful life by making a $5,600 cash payment and issuing a noninterset-bearing note for $19,200 due in two years. The fair value of the the equipment is unknown. An 11% annual interest rate is typical of this transaction. The company uses the effective interest method to amortize interest expense and the straight-line method to estimate depreciation expense. a. Prepare the...
Recording Fixed Asset Disposal Manchester Company sells equipment on June 1, 2021, for $194,600 cash. Manchester incurred $1,120 of removal and selling costs on disposal. The equipment cost $350,000 when it was purchased on January 2, 2018. Its estimated residual value and useful life were $56,000 and 10 years, respectively. Manchester uses straight-line depreciation and records annual depreciation on each December 31. a. Prepare the journal entries needed to record the asset disposal on June 1, 2021. b. Record the...