On Jan 2, JKM Co buys a $40,000 piece of equipment paying $15,000 down and signing a 4 yearnote for the remaining balance. On Jan 2, JKM Co paid $1,500 freight cost and $5,500 installationcost to get the equipment ready to be used. The useful life of the equipment is 10 years. Theequipment has an estimated residual value of $7,000. JKM Co uses straight line depreciation.Required:1. Prepare the journal entry or entries needed to record the equipment cost as of Jan 2.2. Calculate the annual depreciation. Please use the space below the JE table on the MSWord linkfile to show your calculation of annual depreciation.3. Prepare the journal entry as of Dec 31 to record depreciation.4. JKM Co sold the piece of equipment on Dec 31 at the end of 8 years for $14,000 cash. Preparethe entry to record the sale of the equipment. Assume depreciation has been recorded through thesale date. Show your calculations for the disposal of the equipment below the JE table on the

Fixed Assets: The assets that last longer than a year is classified as fixed assets. The consumption…

Answered: On Jan 2, JKM Co buys a $40,000 piece…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume that Smith's Auto Sales paid $45,000 for equipment with a 15-year life and zero expected residual value. After using the equipment for six years, the company determines that the asset will remain useful for only five more years. Read the requirements LOADING... . Requirement 1. Record depreciation expense on the equipment for Year 7 by the straight-line method.
The Donut Stop acquired equipment for $19,000. The company uses straight-line depreciation and estimates a residual value of $3,000 and a four-year service life. At the end of the second year, the company estimates that the equipment will be useful for four additional years, for a total service life of six years rather than the original four. At the same time, the company also changed the estimated residual value to $1,200 from the original estimate of $3,000.Required:Calculate how much The Donut Stop should record each year for depreciation in years 3 to 6.
Manufacturing Inc. purchased a machine on 1 January 20X2 for $520,000. The estimated physical life of the machine is 15 years, but the estimated useful life to Manufacturing is 10 years. The equipment has an estimated residual value of $29,560. The equipment was ready for use on 1 January 20X2. Required: 1. Calculate depreciation expense for 20X2 and 20X3 using the straight-line method. 20X2 20X3 Depreciation Expense $ 49,044 $ 49,044 2. Assume the machine is anticipated to produce 804,000 units. In 20X2 the machine produced 152,000 units and in 20X3 122,000 units. Calculate depreciation expense for 20X2 and 20X3 using the productive-output method. Depreciation Expense 20X2 20X3 3. Calculate depreciation expense for 20X2 and 20X3 using the declining-balance method using 40%. 20X2 Depreciation Expense 20X3
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On April 1, year 1, ABC. Ltd. purchased a piece of equipment for $ 440000 plus installation costs of $ 60000 that were necessary to make the equipment operational. ABC. Ltd. has a December 31, fiscal year end and uses the straight line depreciation method. The piece of equipment is expected to have a useful life of 10 years at which time it will have a residual value of $ 20000. What is the book value of the equipment as of December 31, year 3. Round your answer to the nearest dollar.
Jim Company bought a machine for $54,260 with an estimated life of 5 years. The residual value of the machine is $7,100. This machine is expected to produce 131,000 units. In year 1, it produced 24,500 units, and in year 2, 43,500 units. Assuming the units-of-production method, calculate the first 2 years’ depreciation. Year 1: Year 2:
On January 1, Phil’s Burgers purchased a burger making machine at a cost of $400,000. The delivery, installation and set up costs were $25,000. The company expects the machine to be productive for 5 years and have a residual value of $50,000 at the end of its useful life. calculated the depreciation using the double declining method
Bha
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The Black Limo Company (BLC) purchased a limo on January 1 of Year 1. The limo cost $48,000. It had an expected useful life of 4 years and an $8,000 salvage value. Assume BLC uses straight-line depreciation. At the beginning of Year 3, the limo is sold for $30,000 cash. As a result of the asset disposal BLC will recognize a ______ activities.

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