he E10.9 (LO 1) (Composite Depreciation) Presented below is information related to LeBron James Manufacturing Corporation. Asset Cost Estimated Salvage Estimated Life (in years) A $40,500 10 B 33,600 9 с 36,000 9 D 19,000 E 23,500 $5,500 4,800 3,600 1,500 2,500 7 6 Instructions a. Compute the rate of depreciation per year to be applied to the plant assets under the composite method. b. Prepare the adjusting entry necessary at the end of the year to record depreciation for the year. c. Prepare the entry to record the sale of asset D for cash of $4,800. It was used for 6 years, and depreciation was entered under the composite method.
he E10.9 (LO 1) (Composite Depreciation) Presented below is information related to LeBron James Manufacturing Corporation. Asset Cost Estimated Salvage Estimated Life (in years) A $40,500 10 B 33,600 9 с 36,000 9 D 19,000 E 23,500 $5,500 4,800 3,600 1,500 2,500 7 6 Instructions a. Compute the rate of depreciation per year to be applied to the plant assets under the composite method. b. Prepare the adjusting entry necessary at the end of the year to record depreciation for the year. c. Prepare the entry to record the sale of asset D for cash of $4,800. It was used for 6 years, and depreciation was entered under the composite method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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E10.9 (LO 1) (Composite Depreciation) Presented below is information related to LeBron James Manufacturing Corporation.
Asset Cost Estimated Salvage Estimated Life (in years)
A $40,500
10
B
33,600
9
с
36,000
9
D
19,000
E
23,500
$5,500
4,800
3,600
1,500
2,500
7
6
Instructions
a. Compute the rate of depreciation per year to be applied to the plant assets under the composite method.
b. Prepare the adjusting entry necessary at the end of the year to record depreciation for the year.
c. Prepare the entry to record the sale of asset D for cash of $4,800. It was used for 6 years, and depreciation was entered under the
composite method.
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