Dewey Corporation purchased a machine for $340,000 on January 1, 2012. The machine had an estimated useful life of 12 years and an estimated residual value of $40,000. The machine was depreciated using the straight-line method. On April 1, 2021, the company no longer needed the machine and sold it for $80,000. Dewey takes a half-year depreciation for the year an asset is disposed. a. What is the book value of the machine at the end of 2020? $115,000 b. Calculate and record the depreciation for 2021 in the journal provided. c. Calculate the book value of the machine at the time of sale. $102,500 d. Record the sale of the machine on April 1 in the journal provided.
Dewey Corporation purchased a machine for $340,000 on January 1, 2012. The machine had an estimated useful life of 12 years and an estimated residual value of $40,000. The machine was depreciated using the straight-line method. On April 1, 2021, the company no longer needed the machine and sold it for $80,000. Dewey takes a half-year depreciation for the year an asset is disposed. a. What is the book value of the machine at the end of 2020? $115,000 b. Calculate and record the depreciation for 2021 in the journal provided. c. Calculate the book value of the machine at the time of sale. $102,500 d. Record the sale of the machine on April 1 in the journal provided.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 11E: On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an...
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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.
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Question
Dewey Corporation purchased a machine for $340,000 on January 1, 2012. The machine had an | ||||||||||
estimated useful life of 12 years and an estimated residual value of $40,000. The machine was | ||||||||||
On April 1, 2021, the company no longer needed the machine and sold it for $80,000. Dewey takes | ||||||||||
a half-year depreciation for the year an asset is disposed. | ||||||||||
a. What is the book value of the machine at the end of 2020? | $115,000 | |||||||||
b. Calculate and record the depreciation for 2021 in the journal provided. | ||||||||||
c. Calculate the book value of the machine at the time of sale. | $102,500 | |||||||||
d. Record the sale of the machine on April 1 in the journal provided. | ||||||||||
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