Question

On March 31, 2021, the Herzog Company purchased a factory complete with vehicles and equipment. The allocation of the total purchase price of $1,020,000 to the various types of assets along with estimated useful lives and residual values are as follows: Estimated Useful Life (in years) N/A Asset Land Building Equipment Vehicles Total 25 Estimated Residual Value N/A none 12% of cost $14,000 Cost $ 110,000 520,000 220,000 170,000 $1,020,000 10 10 On June 29, 2022, equipment included in the March 31, 2021, purchase that cost $102,000 was sold for $82,000. Herzog uses the straight-line depreciation method for building and equipment and the double-declining-balance method for vehicles. Partial-year depreciation is calculated based on the number of months an asset is in service. Required: 1. Compute depreciation expense on the building, equipment, and vehicles for 2021. 2. Prepare the journal entries to record the depreciation on the equipment sold on June 29, 2022, and the sale of equipment. 3. Compute depreciation expense on the building, remaining equipment, and vehicles for 2022. Complete this question by entering your answers in the tabs below. Required Required Required 1 Compute depreciation expense on the building, equipment, and vehicles for 2021. (Do not round intermediate calculations.) Depreciation Expense Building Equipment Vehicles Required 1 Required 2 >

Answer 1

Answer

1.

Depreciation on Building

= {(Cost- Residual Value) / Useful life} * 9/12 Months

= {($520,000 – 0) / 25 Years} * 9/12 Months

Depreciation on Building = $15,600 Per Year

Depreciation on Equipment

= {(Cost- Residual Value) / Useful life} * 9/12 Months

= {($220,000 – 12% of 220,000) / 10 Years} * 9/12 Months

Depreciation on Equipment = $14,520 Per Year

Depreciation on Vehicles

Depreciation Rate = Depreciation rate under Straight Line * 2

= (1 / Useful life) * 2

= (1 / 10 Years) * 2

= 20%

Depreciation = Cost * Rate * 9/12 Months

= $170,000 * 20% * 9/12 Months

Depreciation on Vehicles = $25,500

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Answer 2

Where's the journal entry for question 2?