Calculate depreciation expense on the building, machinery, and equipment for 2020. Show your calculations. Prepare the journal entries to record (i) depreciation on the portion of machinery sold on September 30, 2021 and (ii) the sale of machinery. Show all calculations before you prepare your journal entries. Use the below format for your journal entries.
On March 1, 2020, the Ottoman Company purchased land, building, machinery and equipment for $2,000,000. According to independent appraisals, the fair values were $1,500,000 (Land), $1,200,000 (Building), $800,000 (Machinery), and $500,000 (Equipment).
The following information is also provided:
|
ASSET |
ESTIMATED RESIDUAL VALUE |
ESTIMATED USEFUL LIFE IN YEARS |
|
Land |
N/A |
N/A |
|
Building |
None |
20 |
|
Machinery |
10% of cost |
10 |
|
Equipment |
$20,000 |
5 |
On September 30, 2021, machinery included in the March 1, 2020, acquisition that cost $100,000 was sold for $140,000. Ottoman uses the
Required:
- Calculate depreciation expense on the building, machinery, and equipment for 2020. Show your calculations.
- Prepare the journal entries to record (i) depreciation on the portion of machinery sold on September 30, 2021 and (ii) the sale of machinery. Show all calculations before you prepare your journal entries. Use the below format for your journal entries.
Date
Accounts
Debit
Credit
Sep 30, 2021
Sep 30, 2021
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