Homework Answers
solution: First of all we need capitalized cost of machine = $48,450*1.08 + $360 + $280 + $56 = $52,966
1. Computation of depreciation using:
Straight-Line Method:
Annual depreciation expense under this method = ($52,966 - 4000)/12
| Balance sheet | |||
|---|---|---|---|
| End of year 1 | End of year 2 | End of year 3 | |
| Equipment | $52,966 | $52,966 | $52,966 |
| Accumulated Depreciation | $ 4,081 | $ 8,162 | $12,243 |
| Book Value | $48,885 | $44,804 | $40,723 |
| Depreciation Expenses | $4,081 | $4,081 | $4,081 |
Units of production method:
Double Declining Method:
Double declining depreciation rate = (100 /12)*2 = 16.67%
2. Computation of yearly depreciation expense after revision:
Book value at the beginning of year 5 = $52,966 - $4,081*4 = $36,642
Thus, yearly depreciation expense after revision = $36,642 / 6 = $6,107
3. Journal entry to dispose:
| Account Titles & Explanation | Debit | Credit |
|---|---|---|
| Cash | $12,156 | |
| Accumulated depreciation ($4,081*10) | $40,810 | |
| Equipment | $52,966 |
4. Journal entry to sale of equipment at the end of year 9:
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hi please help me with this i think i got it all wrong.
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