Accounting Question: 1. The new controller of Xtreme Company, Ally Williams, has reviewed the expected useful lives and residual values of selected depreciable assets at December 31, 2024. (Depreciation for 2024 has not been recorded yet.) Her findings are as follows: Type of Asset Date Acquired Cost Building Jan. 1, 2009 $800,000 Equipment Jan. 1, 2022 125,000 Total Useful Life in Years Current Proposed 20 (Building) 30 (Building) 5 (Equipment) 4 (Equipment) Residual Value Current Proposed $40,000 (Building) $60,500 (Building) 5,000 (Equipment) 4,000 (Equipment) After discussion, management agrees to accept Ally's proposed changes. All assets are depreciated by the straight-line method. Xtreme Company has a December 31 year end. a) For each asset, calculate the annual depreciation expense using the original estimated useful life and residual value. b) Calculate the carrying amount of each asset as at January 1, 2024. c) For each asset, calculate the revised annual depreciation expense and the carrying amount at December 31, 2024. Record asset addition and revised depreciation. Please show all steps, thanks.
Accounting Question: 1. The new controller of Xtreme Company, Ally Williams, has reviewed the expected useful lives and residual values of selected depreciable assets at December 31, 2024. (Depreciation for 2024 has not been recorded yet.) Her findings are as follows: Type of Asset Date Acquired Cost Building Jan. 1, 2009 $800,000 Equipment Jan. 1, 2022 125,000 Total Useful Life in Years Current Proposed 20 (Building) 30 (Building) 5 (Equipment) 4 (Equipment) Residual Value Current Proposed $40,000 (Building) $60,500 (Building) 5,000 (Equipment) 4,000 (Equipment) After discussion, management agrees to accept Ally's proposed changes. All assets are depreciated by the straight-line method. Xtreme Company has a December 31 year end. a) For each asset, calculate the annual depreciation expense using the original estimated useful life and residual value. b) Calculate the carrying amount of each asset as at January 1, 2024. c) For each asset, calculate the revised annual depreciation expense and the carrying amount at December 31, 2024. Record asset addition and revised depreciation. Please show all steps, thanks.
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles
Section: Chapter Questions
Problem 8.6E
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Accounting Question:
1. The new controller of Xtreme Company, Ally Williams, has reviewed the expected useful lives and residual values of selected
| Type of Asset | Date Acquired | Cost | |
| Building | Jan. 1, 2009 | $800,000 | |
| Equipment | Jan. 1, 2022 | 125,000 |
| Total Useful Life in Years |
| Current | Proposed |
| 20 (Building) | 30 (Building) |
| 5 (Equipment) | 4 (Equipment) |
| Residual Value |
| Current | Proposed |
| $40,000 (Building) | $60,500 (Building) |
| 5,000 (Equipment) | 4,000 (Equipment) |
After discussion, management agrees to accept Ally's proposed changes. All assets are depreciated by the straight-line method. Xtreme Company has a December 31 year end.
a) For each asset, calculate the annual depreciation expense using the original estimated useful life and residual value.
b) Calculate the carrying amount of each asset as at January 1, 2024.
c) For each asset, calculate the revised annual depreciation expense and the carrying amount at December 31, 2024.
Record asset addition and revised depreciation.
Please show all steps, thanks.
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VIEWStep 4: c) The calculation the revised annual depreciation expense and the carrying amount is as follows-
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