1.Depreciation by Two Methods A Kubota tractor acquired on January 8 at a cost of $126,000 has an estimated useful life of ten years. Assuming that it will have no residual value. a. Determine the depreciation for each of the first two years by the straight-line method. First Year Second Year $ $ b. Determine the depreciation for each of the first two years by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your final answer to the nearest dollar. First Year Second Year $ $
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
1.
A Kubota tractor acquired on January 8 at a cost of $126,000 has an estimated useful life of ten years. Assuming that it will have no residual value.
a. Determine the depreciation for each of the first two years by the straight-line method.
| First Year | Second Year |
| $ | $ |
b. Determine the depreciation for each of the first two years by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your final answer to the nearest dollar.
| First Year | Second Year |
| $ | $ |
2.Depreciation by Units-of-activity Method
A diesel-powered tractor with a cost of $249,800 and estimated residual value of $2,800 is expected to have a useful operating life of 95,000 hours. During April, the tractor was operated 100 hours.
Determine the depreciation for the month. If required, carry out any division to two decimal places.
$
3.
Entries for Sale of Fixed Asset
Equipment acquired on January 8 at a cost of $163,350, has an estimated useful life of 16 years, has an estimated residual value of $9,750, and is depreciated by the straight-line method.
a. What was the book value of the equipment at December 31 the end of the fourth year?
$
b. Assuming that the equipment was sold on April 1 of the fifth year for 116,930.
1.
accounts payable
cash
depreciation expense-equipment
equipment
equpment expense
2. Journalize the entry to record the sale of the equipment. If an amount box does not require an entry, leave it blank. Do not round intermediate calculations.
accounts payable
cash
depreciation expense-equipment
equipment
gain on sale of equipment
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