Req. 1 | ||||
Entry to record purchase of equipment | ||||
Equipment | $ 110,000.00 | |||
To Cash | $ 110,000.00 | |||
Recording depreciation on building | ||||
Depreciation Expense - Building | $ 31,300.00 | |||
To Accu. Depreciation - Building | $ 31,300.00 | |||
(Working - 1) | ||||
Recording depreciation on Equipment | ||||
Depreciation Expense - Equipment | $ 38,400.00 | |||
To Accu. Depreciation - Equipment | $ 38,400.00 | |||
(Working - 2) |
Working 1 | ||||
Cost of Building | $ 715,000.00 | |||
Residual Value | $ 89,000.00 | |||
Depreciable base | $ 626,000.00 | |||
Useful life | 20 | years | ||
Depreciation Expense per year | $ 31,300.00 |
Working 2 | |||||
Rate of Depreciation | (100% / 10) x 2 = 20% | ||||
Depreciation on existing equipment = | ($ 400000 - $ 263000) x 20% | ||||
= | $ 27,400.00 | ||||
Depreciation on new equipment = | $ 110000 x 20% x 6/12 | ||||
= | $ 11,000.00 | ||||
Total Depreciation expense | = | $ 27400 + $ 11000 | |||
= | $ 38,400.00 |
Requirement 2 | ||||||
Property, Plant and Equipment | ||||||
Land | $ 143,000.00 | |||||
Buildings | $ 715,000.00 | |||||
Less: | Accumulated Dep | $(375,300.00) | $ 339,700.00 | |||
Equipment | $ 510,000.00 | |||||
Less: | Accumulated Dep | $(301,400.00) | $ 208,600.00 | |||
Total property, plant and equipment | $ 691,300.00 |
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