Exercise 11-15 (Algo) Double-declining-balance method; switch to straight line [LO11-2, 11-6] On January 2, 2021, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $40,375. The expenditures made to acquire the asset were as follows: Purchase price Freight charges Installation charges Jackson's policy is to use the double-declining-balance (DDB) method of depreciation in the early years of the equipment's life and then switch to straight line halfway through the equipment's life. Required: 1. Calculate depreciation for each year of the asset's eight-year life. 2. Are changes in depreciation methods accounted for retrospectively or prospectively? Complete this question by entering your answers in the tabs below. Required 1 Required 2 $187,000 4,400 7,000 Calculate depreciation for each year of the asset's eight-year life. Depreciation for the Period Year 2021 2022 2023 2024 2025 2026 2027 2028 Total Beginning of Period Book Value Depreciation Rate % % % % Annual Depreciation End of Period Accumulated Depreciation Book Value

Exercise 11-15 (Algo) Double-declining-balance method; switch to straight line [LO11-2, 11-6] On January 2, 2021, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $40,375. The expenditures made to acquire the asset were as follows: Purchase price Freight charges Installation charges Jackson's policy is to use the double-declining-balance (DDB) method of depreciation in the early years of the equipment's life and then switch to straight line halfway through the equipment's life. Required: 1. Calculate depreciation for each year of the asset's eight-year life. 2. Are changes in depreciation methods accounted for retrospectively or prospectively? Complete this question by entering your answers in the tabs below. Required 1 Required 2 $187,000 4,400 7,000 Calculate depreciation for each year of the asset's eight-year life. Depreciation for the Period Year 2021 2022 2023 2024 2025 2026 2027 2028 Total Beginning of Period Book Value Depreciation Rate % % % % Annual Depreciation End of Period Accumulated Depreciation Book Value

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required information Exercise 11-3 (Algo) Depreciation methods partial periods [LO11-2] [The following information applies to the questions displayed below.] On October 1, 2021, the Allegheny Corporation purchased equipment for $148,000. The estimated service life of the equipment is 10 years and the estimated residual value is $5,000. The equipment is expected to produce 260,000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service. Exercise 11-3 (Algo) Part 3 3. Units of production (units produced in 2021, 13,000; units produced in 2022, 28,000). (Round "Depreciation per unit rate" answers to 2 decimal places.) Select formula for Units of Production Depreciation: Calculate 2021 depreciation expense: Depreciation per unit rate Units produced in 2021 Depreciation in 2021 Calculate 2022 depreciation expense: Depreciation per unit rate…
Problem 8-4 (IFRS) On January 1, 2017, Roma Company purchased equipment for P4,000,000. The equipment had a useful life of 10 years and a residual value of P400,000. On January 1, 2021, the entity determined that the useful life of the equipment was 12 years from the date of acquisition and the residual value was P480,000. 1. What is the carrying amount of the equipment on January 1, 2021? a. 2,560,000 b. 2,920,000 c. 2,400,000 d. 2,800,000 2. What amount should be recorded as depreciation of the equipment for 2021? a. 175,000 b. 260,000 c. 360,000 d. 300,000
Problem 27-23 (AICPA Adapted) Patterson Company provided the following information on January 1, 2020: Vehicle cost Useful life in years Useful life in miles Residual value 5,000,000 100,000 1,000,000 Actual miles driven 2020 30,000 20,000 15,000 2021 2022 1. What is the depreciation for 2022 using the SYD method? 1,000,000 1,333,000 800,000 600,000 a. b. с. d. 2. What is the accumulated depreciation on December 31, 2021 using the double declining balance method? а. 1,200,000 b. 1,600,000 c. 2,560,000 d. 3,200,000 3. What is the accumulated depreciation on December 31, 2022 using the miles driven? а. 2,000,000 b. 2,600,000 800,000 d. 600,000 с. CS Scanned with CamScanner
Problem 11-26 (Algo) (LO 11-9) Parnell Company acquired construction equipment on January 1, 2020, at a cost of $77,000. The equipment was expected to have a useful life of five years and a residual value of $14,000 and is being depreciated on a straight-line basis. On January 1, 2021, the equipment was appraised and determined to have a fair value of $73,600, a salvage value of $14,000, and a remaining useful life of four years. In measuring property, plant, and equipment subsequent to acquisition under IFRS, Parnell would opt to use the revaluation model in IAS 16. Assume that Parnell Company is a U.S.-based company that is Issuing securities to foreign Investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore Income taxes. Required: a. Prepare journal entries for this equipment for the years ending December 31, 2020, and December 31, 2021, under (1) U.S. GAAP and (2) IFRS.
Recording Asset Exchanges Minneapolis Inc. has equipment with an original cost of $84,000 and accumulated depreciation of $48,000. This equipment was traded in for new equipment with a list price of $96,000. The new machine can be purchased without a trade-in for $90,000 cash. The difference between the fair value of the new asset and the market value of the old asset will be paid in cash. Prepare the entry to record acquisition of the new machine under each of the following separate cases. a. The new machine is purchased for cash with no trade-in. b. The transaction has commercial substance. The old equipment is traded in, and $60,000 cash is paid. c. The same as in part b except that the transaction lacks commercial substance. a. Account Name Dr. Cr. Answer Answer Answer Answer Answer Answer b. Account Name Dr. Cr. Equipment (new) Answer Answer Accumulated Depreciation Answer Answer Answer Answer Answer Answer Answer Answer Equipment (old) Answer…
Acquisition Cost of Long-Lived Asset The following data relate to a firm's purchase of a machine used in the manufacture of its product: Invoice price Applicable sales tax Cash discount taken for prompt payment Freight paid Cost of insurance coverage on machine while in transit Installation costs Testing and adjusting costs Repair of damages to machine caused by the firm's employees Prepaid maintenance contract for first year of machine's use Determine the acquisition cost of the machine. Acquisition Cost = $ $30,000 2,000 400 260 125 3,000 475 750 300
At the end of 2022, GM did not have any PP&E. On Jan 1, 2023, GM purchased the following assets. Details for setting up depreciation schedules are summarized below: Cost Assets Acquisition Residual Method Useful life Truck 1/1/2023 Warehouse 1/1/2023 Multiple Choice O $1,000,000 $400,000 Factory 1/1/2023 3,000,000 700,000 Machinery 1/1/2023 2,000,000 500,000 Unit-of production Machinery's estimated total production capacity is 50,000 units of cars. During 2023, GM produced a total of 10,000 units using the Machinery, On Dec 31, 2023, sudden changes in the operational and market conditions indicate that the sum of undiscounted future cash flows from the factory is now estimated at $1,800,000. The fair value of the Factory as of the date is $1,500,000. After recognizing depreciation expense for 2023 as scheduled, GM wrote-off the factory. The remaining service life is reduced to additional 5 years and the residual value is updated to $150,000. Depreciation for the factory using these new…
This is a variation of Exercise 11–2 modified to focus on depreciation for partial years.]On October 1, 2018, the Allegheny Corporation purchased machinery for $115,000. The estimated servicelife of the machinery is 10 years and the estimated residual value is $5,000. The machine is expected to produce220,000 units during its life.Required:Calculate depreciation for 2018 and 2019 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service. Round all computations to the nearest dollar.1. Straight line2. Sum-of-the-years’-digits3. Double-declining balance4. One hundred fifty percent declining balance5. Units of production (units produced in 2018, 10,000; units produced in 2019, 25,000)
Computing Impairment of Intangible Assets Stiller Company had the following information for its three intangible assets. 1. Patent: A patent was purchased for $180,000 on June 30, 2018. Stiller estimated the useful life of the patent to be 15 years. On December 31, 2020, the estimated future cash flows attributed to the patent were $153,000. The fair value of the patent was $135,000. 2. Trademark: A trademark was purchased for $9,000 on August 31, 2019. The trademark is considered to have an indefinite life. The fair value of the trademark on December 31, 2020, is $4,500. 3. Goodwill: Stiller recorded goodwill in January 2019, related to a purchase of another company. The carrying value of goodwill is $54,000 on December 31, 2020. On December 31, 2020, the segment for which the goodwill relates had a fair value of $1,044,000. The book value of the net assets of the segment (including goodwill) is $1,080,000. Note: Round each of your answers to the nearest whole dollar. a. Classify each…
Problem 11-11 (Algo) Error correction; change in depreciation method [LO11-2, 11-6, 11-7] Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $2,130,000. This cost figure included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance method was used to determine depreciation expense for 2022 and 2023. In 2024, after the 2023 financial statements were issued, the company decided to switch to the straight-line depreciation method for this equipment. At that time, the company's controller discovered that the original cost of the equipment incorrectly included one year of annual maintenance charges for the equipment. Required: 1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024. 2.…
Exercise 11-4 (Algo) Other depreciation methods LO11-21 [The following information applies to the questions displaved below.) On January 1, 2021, the Allegheny Corporation purchased equipment for $343,000. The estimated service life of the equipment is 10 years and the estimated residual value is $24,000. The equipment is expected to produce 296.000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. Print Exercise 11-4 (Algo) Part 1 References 1. Sum-of-the-years'-digits (Do not round intermediate calculations. Round final answers to the nearest whole dollar amount.)
! Required information Problem 8-6A (Algo) Disposal of plant assets LO C1, P1, P2 [The following information applies to the questions displayed below.] Onslow Co. purchased a used machine for $240,000 cash on January 2. On January 3, Onslow paid $8,000 to wire electricity to the machine and an additional $1,600 to secure it in place. The machine will be used for six years and have a $28,800 salvage value. Straight-line depreciation is used. On December 31, at the end of its fifth year in operations, it is disposed of. 2. Prepare journal entries to record depreciation of the machine at December 31. View transaction list Journal entry worksheet 1 2 > Record the first year year-end adjusting entry for the depreciation expense of the used machine. Note: Enter debits before credits. Date General Journal Debit Credit Dec 31 Record entry Clear entry View general journal 2. Prepare journal entries to record depreciation of the machine at December 31. View transaction list Journal entry…