Ivanhoe Company owns equipment that cost $47,000 when purchased on January 2, 2024. It has been depreciated using the straight- line method based on estimated residual value of $5,000 and an estimated useful life of five years. Following are the four independent situations. (a) Prepare Ivanhoe Company's journal entry to record the sale of the equipment for $24,000 on January 2, 2027. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter 0 for the amounts. List all debit entries before credit entries.) Date Account Titles Jan. 2 Save for Later Debit Credit Attempts: 0 of 1 used Submit Answer

Ivanhoe Company owns equipment that cost $47,000 when purchased on January 2, 2024. It has been depreciated using the straight- line method based on estimated residual value of $5,000 and an estimated useful life of five years. Following are the four independent situations. (a) Prepare Ivanhoe Company's journal entry to record the sale of the equipment for $24,000 on January 2, 2027. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter 0 for the amounts. List all debit entries before credit entries.) Date Account Titles Jan. 2 Save for Later Debit Credit Attempts: 0 of 1 used Submit Answer

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 7RE: Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of...

See similar textbooks

Similar questions

Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.
Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.
On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
At the end of 2020, while auditing Sandlin Companys books, before the books have been closed, you find the following items: a. A building with a 30-year life (no residual value, depreciated using the straight-line method) was purchased on January 1, 2020, by issuing a 90,000 non-interest-bearing, 4-year note. The entry made to record the purchase was a debit to Building and a credit to Notes Payable for 90,000; 12% is a fair rate of interest on the note. b. The inventory at the end of 2020 was found to be overstated by 15,000. At the same time, it was discovered that the inventory at the end of 2019 had been overstated by 35,000. The company uses the perpetual inventory system. c. For the last 3 years, the company has failed to accrue salaries and w-ages. The correct amounts at the end of each year were: 2018, 12,000; 2019, 18,000; and 2020, 10,000. Required: 1. Prepare journal entries to correct the errors. Ignore income taxes. 2. Assume, instead, that the company discovered the errors after it had closed the books. Prepare journal entries to correct the errors. Ignore income taxes.
Albany Corporation purchased equipment at the beginning of Year 1 for 75,000. The asset does not have a residual value and is estimated to be in service for 8 years. Calculate the depreciation expense for Years 1 and 2 using the double-declining-balance method. Round to the nearest dollar.
During 2019, Ryel Companys controller asked you to prepare correcting journal entries for the following three situations: 1. Machine A was purchased for 50,000 on January 1, 2014. Straight-line depreciation has been recorded for 5 years, and the Accumulated Depreciation account has a balance of 25,000. The estimated residual value remains at 5,000, but the service life is now estimated to be 1 year longer than estimated originally. 2. Machine B was purchased for 40,000 on January 1, 2017. It had an estimated residual value of 5,000 and an estimated service life of 10 years. it has been depreciated under the double-declining-balance method for 2 years. Now, at the beginning of the third year, Ryel has decided to change to the straight-line method. 3. Machine C was purchased for 20,000 on January 1, 2018, Double-declining-balance depreciation has been recorded for 1 year. The estimated residual value of the machine is 2,000 and the estimated service life is 5 years. The computation of the depreciation erroneously included the estimated residual value. Required: Prepare any necessary correcting journal entries for each situation. Also prepare the journal entry necessary for each situation to record depreciation expense for 2019.
Akron Incorporated purchased an asset at the beginning of Year 1 for 375,000. The estimated residual value is 15,000. Akron estimates that the asset has a service life of 5 years. Calculate the depreciation expense using the sum-of-the-years-digits method for Years 1 and 2 of the assets life.
Pharoah Company owns equipment that cost $71.000 when purchased on January 1, 2019. It has been depreciated using the straight- line method based on an estimated salvage value of $11,000 and an estimated useful life of 5 years. Prepare Pharoah Company's journal entries to record the sale of the equipment in these four independent situations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) (a) Sold for $37,000 on January 1, 2022. (b) Sold for $37,000 on May 1, 2022. (c) Sold for $15,000 on January 1, 2022. (d) Sold for $15,000 on October 1, 2022
Sheridan Company owns equipment that cost $68,520 when purchased on January 1, 2019. It has been depreciated using the straight- line method based on estimated salvage value of $6,000 and an estimated useful life of 5 years. Prepare Sheridan Company's journal entries to record the sale of the equipment in these four independent situations. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) (a) Sold for $32,512 on January 1, 2022. (b) Sold for $32,512 on May 1, 2022. (c) Sold for $10,100 on January 1, 2022. (d) Sold for $10,100 on October 1, 2022. No. Account Titles and Explanation Debit Credit (a) (b) (To record depreciation) (To record sale of equipment) (c) (d) (To record depreciation) (To record sale of equipment)
Ivanhoe Company owns equipment that cost $64,560 when purchased on January 1, 2019. It has been depreciated using the straight- line method based on estimated salvage value of $4,920 and an estimated useful life of 5 years. Prepare Ivanhoe Company's journal entries to record the sale of the equipment in these four independent situations. (List all debit entries before credit entries. Credit account tities are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) (a) (b) (c) (d) No. Account Titles and Explanation (a) Sold for $30,784 on January 1, 2022. Sold for $30,784 on May 1, 2022. Sold for $10,100 on January 1, 2022. Sold for $10,100 on October 1, 2022. (b) Cash Accumulated Depreciation Equipment Gain on Disposal of Plant Assets Equipment Accumulated Depreciation Equipment Gain on Disposal of Plant Assets (To record depreciation) Cash Accumulated Depreciation Equipment…
Sunland Company owns equipment that cost $114,000 when purchased on January 2, 2024. It has been depreciated using the straight-line method based on estimated residual value of $6,000 and an estimated useful life of five years. Following are the four independent situations. Assume depreciation has been recorded to the date of sale. (a) Prepare Sunland Company's journal entry to record the sale of the equipment for $51,600 on January 2, 2027. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles Jan. 2 Debit Credit