Mandala Company acquired a new milling machine on April 1, 2008. The machine has a special component that required replacement before the end of the useful life. The asset was originally recorded in two accounts, one representing the main unit and the other for the special component. Depreciation is recorded by the straight line method and residual value is disregarded. On April 1, 2014, the special component is scrapped and is replaced with a similar component. This new component is expected to have a residual value of approximately 20% of cost at the end of the useful life of the main unit, and because of materiality, the residual value will be considered in calculating depreciation. Main milling machine: Purchase price in 2008 Residual Value 7,500,000 100,000 Estimated useful life 10 years First special component Purchase price Residual Value 1,200,000 60,000 Estimated useful life 6 years Second special component Purchase price 2,000,000 Residual Value (20% x 2,000,000) 400,000 What is the total depreciation for 2014?

Mandala Company acquired a new milling machine on April 1, 2008. The machine has a special component that required replacement before the end of the useful life. The asset was originally recorded in two accounts, one representing the main unit and the other for the special component. Depreciation is recorded by the straight line method and residual value is disregarded. On April 1, 2014, the special component is scrapped and is replaced with a similar component. This new component is expected to have a residual value of approximately 20% of cost at the end of the useful life of the main unit, and because of materiality, the residual value will be considered in calculating depreciation. Main milling machine: Purchase price in 2008 Residual Value 7,500,000 100,000 Estimated useful life 10 years First special component Purchase price Residual Value 1,200,000 60,000 Estimated useful life 6 years Second special component Purchase price 2,000,000 Residual Value (20% x 2,000,000) 400,000 What is the total depreciation for 2014?

Name: Mandala Company acquired a new milling machine on April 1, 2008. The
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: Mandala Company acquired a new milling machine on April 1, 2008. The machine has aspecial component that required replacement before the end of the useful life. The assetwas originally recorded in two accounts, one representing the main unit and the

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The Snack Stop had the following long-term asset balances as of January 1, 2015: All of the assets were purchased at the beginning of 2013. The building is depreciated over a 20-year service life using the straight-line method and estimating no residual value. The equipment is depreciated over a 10-year useful life using the double-declining-balance method with an estimated residual value of $10,000. The patent is estimated to have an 8-year service life with no residual value and is amortized using the straight-line method. Depreciation and amortization has already been calculated for the first two years.Required:1. For the year ended December 31, 2015, record depreciation expense for buildings and equipment. Land is not depreciated.2. For the year ended December 31, 2015, record amortization expense for the patent.3. Calculate the book value for each of the four long-term assets at December 31,2015.
Wardell Company purchased a minicomputer on January 1, 2013, at a cost of $50,000. The computer was depreciated using the straight-line method over an estimated seven-year life with an estimated residual value of $4,000. On January 1, 2016, the estimate of useful life was changed to a total of 11 years, and the estimate of residual value was changed to $800. Question Journal entries to record depreciation for 2016 would include: Debit to Depreciation Expense - Computers of $7,143 Credit to Accumulated Depreciation - Computers of $3,686 Debit to Accumulated Depreciation - Computers of $6,571 Debit to Depreciation Expense - Computers of $4,707
A truck was acquired on July 1, 2012, at a cost of $216,000. The truck had a six-year useful life and an estimated residual value of $24,000. The straight-line method of depreciation was used. On January 1, 2015, the truck was overhauled at a cost of $20,000, which extended the useful life of the truck for an additional two years beyond that originally estimated (residual value is still estimated at $24,000). In computing depreciation for annual adjustment purposes, expense is calculated for each month the asset is owned. Instructions Prepare the appropriate entries for January 1, 2015 and December 31, 2015
Wardell Company purchased a minicomputer on January 1, 2013, at a cost of $50,000. The computer was depreciated using the sum-of-the-years'-digits method over an estimated seven-year life with an estimated residual value of $4,000. On January 1, 2016, the estimate of useful life was changed to a total of 11 years, and the estimate of residual value was changed to $800. Question Depreciation for 2016 would be: $4,362 $7,714 $3,790 $5,790
On January 1, 2007, Flax Co. purchased a machine for 528,000 and depreciated it by the straight-line method using an estimateduseful life of eight years with no salvage value. On January 1, 2010, Flax determined that the machine had a useful life of six years from the date of acquisition and will have a salvage value of 48,000. An accounting change was made in 2010 to reflect these additional data. The accumulated depreciation for this machine should have a balance at December 31, 2010 ofa.292,000b.308,000c.320,000d.352,000
Crane Ltd. purchased equipment on January 1, 2015 at a cost of $171,380. The equipment has an estimated useful life of 9 years and a residual value of $9,650. Crane realized that there was a declining demand for the product being produced by the equipment. Given this indicator of possible impairment, management determined that the recoverable amount of the asset on December 31, 2018 was $95,260. The company uses the straight-line method of depreciation. (a) Calculate the annual depreciation and the carrying amount at December 31, 2018. Annual depreciation $ Carrying amount $
Wardell Company purchased a minicomputer on January 1, 2014, at a cost of $40,000. The computer was depreciated using the straight-line method over an estimated five-year life with an estimated residual value of $4,000. On January 1, 2016, the estimate of useful life was changed to a total of 10 years, and the estimate of residual value was changed to $900. Required: 1. Prepare the appropriate adjusting entry for depreciation in 2016 to reflect the revised estimate. 2. Repeat requirement 1 assuming that the company uses the sum-of-the-years’-digits method instead of the straight-line method.
On January 1, 2014, ABC Company purchased a machine for P504,000 that was placed in service on March 1, 2014. Additional cost incurred to bring the asset to its location and prepare for its intended use were: shipping, P4,000 and installation and testing cost, P6,000. The estimated useful life of the asset was 10 years and has an estimated salvage value of P34,000. What amount of depreciation should be recognized for the year ended December 31, 2014?
In recent years, Sunland Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Machine Acquired Cost SalvageValue Useful Life(in years) DepreciationMethod 1 Jan. 1, 2020 $129,500 $41,500 8 Straight-line 2 July 1, 2021 85,500 10,700 5 Declining-balance 3 Nov. 1, 2021 76,800 7,800 7 Units-of-activity For the declining-balance method, Sunland Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 34,500. Actual hours of use in the first 3 years were: 2021, 770; 2022, 5,700; and 2023, 7,400. Compute the amount of accumulated depreciation on each machine at December 31, 2023. MACHINE 1 MACHINE 2…
On April 1, 2014, the KB Toy Company purchased equipment to be used in its manufacturing process. The equipment cost $48,000, has an eight-year useful life, and has no residual value. The company uses the straightline depreciation method for all manufacturing equipment. On January 4, 2016, $12,350 was spent to repair the equipment and to add a feature that increased its operating efficiency. Of the total expenditure, $2,000 represented ordinary repairs and annual maintenance and $10,350 represented the cost of the new feature. In addition to increasing operating efficiency, the total useful life of the equipment was extended to 10 years. Required: Prepare journal entries for the following: 1. Depreciation for 2014 and 2015. 2. The 2016 expenditure. 3. Depreciation for 2016.
In recent years, Larkspur Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Machine Acquired Cost Salvage Value Useful Life (years) Depreciation Method 1 1/1/2020 $ 99,800 $ 13,000 8 Straight-line 2 7/1/2021 92,000 11,000 5 Declining-balance 3 11/1/2021 104,000 8,000 6 Units-of-activity For the declining-balance method, Larkspur Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 32,000. Actual hours of use in the first 3 years were 2021, 600; 2022, 4,700; and 2023, 6,700. If machine 2 was purchased on 4/1/2021 instead of 7/1/2021, what would be the depreciation expense for this machine in 2021 and in 2022?
In recent years, Larkspur Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Machine Acquired Cost Salvage Value Useful Life (years) Depreciation Method 1 1/1/2020 $ 99,800 $ 13,000 8 Straight-line 2 7/1/2021 92,000 11,000 5 Declining-balance 3 11/1/2021 104,000 8,000 6 Units-of-activity For the declining-balance method, Larkspur Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 32,000. Actual hours of use in the first 3 years were 2021, 600; 2022, 4,700; and 2023, 6,700. For Bus #3, calculate depreciable cost per mile under units-of-activity method.