Gwynedd Industries uses straight-line depreciation on all of its depreciable assets. Thecompany records annual depreciation expense at the end of each calendar year. On January1, 2020, the company purchased a machine costing $170,000, and it has an estimated usefullife of 15 years and an estimated residual value of $26,000. Depreciation for partial years isrounded to the nearest full month. In 2024, management decided to revise its estimated lifefrom 18 years to 25 years. No change was made in the estimated residual value. The revisedestimate of the useful life was decided prior to recording annual depreciation expense for theyear ended December 31, 2024. Instructions: a) Prepare journal entries in chronological orderfor the given events, beginning with the purchase of machinery on January 1, 2020. Recorddepreciation expense separately for each year 2020 through 2024 (5 separate entries for eachyear's depreciation) (Hint: record the purchase and annual depreciation for each year)

The answer is written below:Explanation:Here are the journal entries for the given events, beginning…

Answered: Gwynedd Industries uses straight-line…

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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Atomic Corporation has a June 30th year end. It has used straight line depreciation on its reactor since its purchase for $912,800 January 1, 2018 based on expectations of a ten year life. No salvage value was estimated. At the beginning of the fiscal year of July 1st, 2022 , management realized that that the reactor life was in reality only 4 years. This is considered a change in accounting estimate and you are asked to solve it. Required 1: What is the amount of Depreciation Expense reported for the year ended June 30th, 2022? $ Required 2: What is the amount of Depreciation Expense to be reported for the year ended June 30th, 2023? $ Required 3: What is the amount of Accumulated Depreciation that is retroactively recognized on July 1st 2022 when the remaining useful life is re-estimated? $ Required 4: What is the Net Book Value of the reactor on June 30th, 2022? $ Required 5: What is the Net Book Value of the reactor on December 31st, 2022? $ Required 6: What is the Net…
On January 1, 2021 the Hogan Manufacturing Company purchased a machine for $250,000. The company expects the service life of the machine to be 5 years and its anticipated residual value to be $40,000. The company's financial year end is December 31 and the straight line method is used for all depreciable assets. Jan 1, 2023, the company revised its estimate of service life from 5 to 8 years and also revised its estimated residual value to be $22,000. Required: Calculate depreciation for 2023
In March 2019, Dempo Org purchased production equipment valued at $640,000. In 2021, auditors discovered that half of the value of the equipment had been originally expensed in 2019. At the time of acquisition, the equipment was expected to last 8 years, with no salvage value. Dempo uses straight-line depreciation for this type of asset and follows a policy of recording a full year of depreciation in the year of acquisition. Dempo's tax rate is 28%. Required: Calculate the retrospective adjustment required and provide the appropriate journal entry to record this adjustment. Calculate the correct amount of depreciation for 2021 and provide the year-end entry.
On October 1, 2021, the Allegheny Corporation purchased equipment for $123,000. The estimated service life of the equipment is 10 years and the estimated residual value is $2,000. The equipment is expected to produce 220,000 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. Double-declining-balance. Double-Declining-Balance Method Choose Numerator: x Choose Denominator: x Fraction of = Depreciation Expense Formula Beginning Book Value x Double the Straight-line Rate x Fraction of Year = Depreciation Amount for 2021 $ _________________ x __________________ % x _____________ = _________ Amount for 2022 $_________________ x…
REMAX Ltd. purchased a warehouse on January 2, 2016, for $440,000. The straight-line method is used, and useful life is estimated to be 10 years, with a $40,000 residual value. At the beginning of 2022 REMAX spent $96,000 on major renovations. After the renovations, REMAX estimated that the useful life would be extended by 4 years, and the residual value would be $20,000. Calculate the depreciation expense for 2022.
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1. On April 22, 2023, Sunlight Enterprises purchased equipment for $134,400. The company expects to use the equipment for 11,500 working hours during its four-year life and that it will have a residual value of $12,500. Sunlight has a December 31 year end and pro-rates depreciation to the nearest month. The actual machine usage was: 1,700 hours in 2023; 2,600 hours in 2024; 3,500 hours in 2025; 3,000 hours in 2026; and 900 hours in 2027. Please explain & show steps for each. a) Complete a depreciation schedule for the life of the asset under each of the following methods: (straight-line,double diminishing-balance assuming a rate of 50%, and units-of-production.) b) Which method results in the lowest profit over the life of the asset? c) Which method results in the least cash used for depreciation over the life of the asset? Calculate partial-year depreciation using different methods.
The cost of equipment purchased by Bramble, Inc., on June 1, 2020, is $92.400. It is estimated that the machine will have a$ 8,400 salvage value at the end of its service life. Its service life is estimated at 7 years, its total working hours are estimated at 42,000, and its total production is estimated at 600,000 units. During 2020, the machine was operated 6,900 hours and produced 63,200 units. During 2021, the machine was operated 6,320 hours and produced 55,200 units. Compute depreciation expense on the machine for the year ending December 31, 2020, and the year ending December 31, 2021, using the following methods. (Round depreciation per unit to 2 decimal places, eg. 15.25 and final answers to 0 decimal places, e.g. 45,892.) 2020 2021 (a) Straight-line (b) Units-of-output (c) Working hours (d) Sum-of-the-years-digits (e) Double-declining-balance (twice the straight-line rate) %24 %4 %24 %24 %24 %24 %24 %24 %24
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On Jan. 1, 2021, Mother, Inc., whose financial year end is every Dec. 31, purchased a unit of equipment at a total cost of P10,000,000. The equipment is estimated to have a useful life of 5 years with a residual value equal to 10% of its cost. - How much is the depreciation expense for 2021 using the straight line depreciation method? - How much is the depreciation expense for 2024 using the SYD depreciation method? - How much is the depreciation expense for 2025 using the double declining balance depreciation method?
The following transactions occurred during 2020. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year. A building that cost $168,960 in 2003 is torn down to make room for a new building. The wrecking contractor was paid $6,528 and was permitted to keep all materials salvaged. Jan. 30 Machinery that was purchased in 2013 for $20,480 is sold for $3,712 cash, f.o.b. purchaser's plant. Freight of $384 is paid on the sale of this machinery. Mar. 10 Mar. 20 A gear breaks on a machine that cost $11,520 in 2012. The gear is replaced at a cost of $2,560. The replacement does not extend the useful life of the machine but does make the machine more efficient. A special base installed for a machine in 2014 when the machine was purchased…

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