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

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Description: Impact of Improvements and Replacements on the Calculation of DepreciationOn January 1, 20-1, two flight simulators were purchased by a space camp for $77,000each with a salvage value of $5,000 each and estimated useful lives of eight years. OnJanua

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

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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Question

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
2.
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

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