Impact of Improvements and Replacements on the Calculation of Depreciation On January 1, 20-1, two flight simulators were purchased by a space camp for $77,000 each with a salvage value of $5,000 each and estimated useful lives of eight years. On January 1, 20-2, the hydraulic system for Simulator A was replaced for $6,000 cash and an updated computer for more advanced students was installed in Simulator B for $9,000 cash. The hydraulic system is expected to extend the life of Simulator A three years beyond the original estimate. Required: 1. Using the straight-line method, prepare general journal entries for depreciation on December 31, 20-1, for Simulators A and B. Page: 1 DOC. POST. NO. REF. DATE ACCOUNT TITLE DEBIT CREDIT 20-1 Dec. 31 3 4 Dec. 31 4 2. Enter the transactions for January 20-2 in a general journal. Page: 1 DOC. POST. NO. REF. DATE ACCOUNT TITLE DEBIT CREDIT 20-2 1. Jan. 1 1 2 3 4 Jan. 1 5. 6 3. Assuming no other additions, improvements, or replacements, calculate the depreciation expense for each simulator for 20-2 through 20-8. If required, round your answers to the nearest cent. Simulator A depreciation per year Simulator B depreciation per year
Impact of Improvements and Replacements on the Calculation of Depreciation On January 1, 20-1, two flight simulators were purchased by a space camp for $77,000 each with a salvage value of $5,000 each and estimated useful lives of eight years. On January 1, 20-2, the hydraulic system for Simulator A was replaced for $6,000 cash and an updated computer for more advanced students was installed in Simulator B for $9,000 cash. The hydraulic system is expected to extend the life of Simulator A three years beyond the original estimate. Required: 1. Using the straight-line method, prepare general journal entries for depreciation on December 31, 20-1, for Simulators A and B. Page: 1 DOC. POST. NO. REF. DATE ACCOUNT TITLE DEBIT CREDIT 20-1 Dec. 31 3 4 Dec. 31 4 2. Enter the transactions for January 20-2 in a general journal. Page: 1 DOC. POST. NO. REF. DATE ACCOUNT TITLE DEBIT CREDIT 20-2 1. Jan. 1 1 2 3 4 Jan. 1 5. 6 3. Assuming no other additions, improvements, or replacements, calculate the depreciation expense for each simulator for 20-2 through 20-8. If required, round your answers to the nearest cent. Simulator A depreciation per year Simulator B depreciation per year
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter18: Accounting For Long-term Assets
Section: Chapter Questions
Problem 10SPA: IMPACT OF IMPROVEMENTS AND REPLACEMENTS ON THE CALCULATION OF DEPRECIATION On January 1, 20-1, two...
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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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