The property, plant, and equipment section of the Jasper Company’s December 31, 2017, balance sheet contained the following:
Property, plant, and equipment:
Land $128,000
Building$ 1,248,000
Less: Accumulated depreciation (240,000) 1,008,000
Equipment 194,200
Less: Accumulated depreciation ? ?
Total property, plant, and equipment ?
The land and building were purchased at the beginning of 2013.
Straight-line depreciation is used and a residual value of $48,000
for the building is anticipated.
The equipment is comprised of the following three machines:
Machine Cost Date Acquired Residual Value Life in Years
101 $64,600 1/1/15 $7,800 8
102 97,000 6/30/16 8,800 9
103 32,600 9/1/17 3,800 8
The straight-line method is used to determine depreciation on
the equipment. On March 31, 2018, Machine 102 was sold for $67,000.
Early in 2018, the useful life of machine 101 was revised to five
years in total, and the residual value was revised to zero.
Required:
1. Calculate the accumulated depreciation on
the equipment at December 31, 2017.
2. Prepare the journal entry to record 2018
depreciation on machine 102 up to the date of sale.
3. Prepare a schedule to calculate the gain or
loss on the sale of machine 102.
4. Prepare the journal entry for the sale of
machine 102.
5. Prepare the 2018 year-end journal entries to record depreciation on the building and equipment.
Accumulated Depreciation:
Record the depreciation on Machine 102 through date of sale:
Loss on sale of machine 102:
Record sale of equipment:
Record the depreciation on the building:
Record depreciation on the equipment:
1.
Requirement 1 |
Machine 101: |
( $64,600 - 7,800 ) /8 Years = $7100 per year |
= $7,100 per year x 3 years = $ 21,300 |
Machine 102: |
( $97,000 - 8,800 ) / 9 years |
= $9,800 per year x 1.5 years = 14,700 |
Machine 103: |
( $32,600 - 3,800 ) 8 year |
= $3,600 per year x 4/12 = 1,200 |
Accumulated depreciation, 12/31/17 $37,200 |
2.
Requirement 2 |
To record depreciation on machine 102 through date of sale. |
31-Mar-18 |
Depreciation expense ($9,800 per year x 3/12)................. 2,450 |
Accumulated depreciation - equipment................... 2,450 |
3.
Requirement 3 |
Loss on sale of machine 102: |
Proceeds $67,000 |
Less book value on 3/31/18: |
Cost $97,000 |
Less accumulated depreciation: |
Depreciation through 12/31/17 $14,700 |
Depreciation from 1/1/18 to |
3/31/18 ($9,800 x 3/12) 2,450 17,150 79850 |
Loss on sale $12,850 |
4.
Requirement 4 |
To record sale of equipment. |
31-Mar-18 |
Cash.......................................................................... 67,000 |
Accumulated depreciation ($14,700 + 2,450)............ 17,150 |
Loss on sale of equipment (determined below).............12,850 |
Equipment............................................................. 97000 |
5.
Requirement 5 |
To record depreciation on the building. |
Depreciation expense [($1,248,000 - 48,000) ÷ 25 years]....... 48,000 |
Accumulated depreciation - building...................... 48,000 |
To record depreciation on the equipment. |
Depreciation expense (determined below)....................... 21,700 |
Accumulated depreciation - equipment................... 21,700 |
Working:
Building: |
Useful life of the building: |
Accumulated depreciation for 5 years (2013 -2017) = $240,000 |
Depreciation per year = $48,000 |
Useful Life of Building = (1,248,000-48,000)/48000 = 25 years |
Equipment: |
Machine 103 (determined above) $ 3,600 |
Machine 101: |
Cost $64,600 |
Less: Accumulated depreciation 21,300 |
Book value, 12/31/17 43,300 |
Revised remaining life (5 years - 3 years) ÷ 2 years 21,650 |
$21,700 |
Please give positive rating
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