Finally, the accountant has started the PPE and Depreciation Schedule for the year ended September 30, 2023. At Island Solutions, the depreciation policy is to apply one month’s ownership, one month’s depreciation. Your team was provided with the following information. • Land and Building were acquired for $800 000 in a lump sum purchase. At the time of acquisition, the appraised values of the land and building were $90 000 and $810 000 respectively. • Equipment with an appraised value and residual value of $40 000 and $3 000 respectively was received by the company as a donation. • Machinery costing $182 900 inclusive of $600 installation expense and $14 900 normal repair and maintenance cost, and with a $6 000 estimated salvage value was sold on February 1, 2023. 1. Complete the PPE and Depreciation Schedule below by providing the values for (a) - (j). Show all working.
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.
2023. At Island Solutions, the depreciation policy is to apply one month’s ownership, one month’s
depreciation. Your team was provided with the following information.
• Land and Building were acquired for $800 000 in a lump sum purchase. At the time of
acquisition, the appraised values of the land and building were $90 000 and $810 000
respectively.
• Equipment with an appraised value and residual value of $40 000 and $3 000 respectively was
received by the company as a donation.
• Machinery costing $182 900 inclusive of $600 installation expense and $14 900 normal repair
and maintenance cost, and with a $6 000 estimated salvage value was sold on February 1, 2023.
1. Complete the PPE and Depreciation Schedule below by providing the values for (a) - (j). Show all working.
![Assets
Date of
Acquisition
Land
Building
Oct 1, 2021
Oct 1, 2021
Equipment Oct 2, 2021
Machinery Oct 2, 2021
Cost
[a]
[b]
[e]
[h]
Residual
Value
$40 000
3 000
6 000
Depreciation
Method
SLM
150%
declining
balance
SYD
Estimated
Useful
Life
(years)
.
[c]
10
8
Annual Depreciation
Expense at
September 30
2022
$13 600
[f]
[0]
2023
[d]
[g]
[j]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Feaf3e714-6d3e-43b0-a6cc-953a8f44a48a%2F6978bead-b322-4c97-9334-392262ddf275%2Fij5qial_processed.jpeg&w=3840&q=75)
Step by step
Solved in 3 steps
Please break down the forumula and where you got the information to put in EACH part of calculation.
2021: ($162,000 x 8/36 x 3/12)
2022: ($153,000 x 8/36 x 9/12+($153,000-($153,000 x 8/36 x 9/12) x 7/36 x 3/12)
2023: ($121,302.08 x 7/36 x 9/12+($121,302.08-($121,302.08 x 7/36 x 9/12) x 6/36 x 3/12)
Step by step because it is unclear. Why is there 9/12 and 3/12.
And 2021 has 8/36 in the first half.
2022 has 8/36 there as well in the first half, then it in 2023, it changes to 7/36.
Please explain
by Bartleby Expert
