On September 1, 2018, Gabe's Brewing Co. purchased equipment for $168,000. Residual value at the end of an estimated 8-year useful life is expected to be $18,000. The company expects the machine to operate for 20,000 hours. The machine operated for 1,500 and 3,500 hours in 2018 and 2019, respectively. REQUIRED: 1. Calculate depreciation expense for 2018 and 2019 using the straightline method. 2. Calculate depreciation expense for 2018 and 2019 using the 150% declining balance method. 3. Calculate depreciation expense for 2018 and 2019 using the units-of-production method. 4. Now, assume the company sells the equipment on December 31, 2019, for $135,000 cash. Prepare the journal entry for the sale of the equipment assuming the company has used the straight-line method of depreciating the equipment.

On September 1, 2018, Gabe's Brewing Co. purchased equipment for $168,000. Residual value at the end of an estimated 8-year useful life is expected to be $18,000. The company expects the machine to operate for 20,000 hours. The machine operated for 1,500 and 3,500 hours in 2018 and 2019, respectively. REQUIRED: 1. Calculate depreciation expense for 2018 and 2019 using the straightline method. 2. Calculate depreciation expense for 2018 and 2019 using the 150% declining balance method. 3. Calculate depreciation expense for 2018 and 2019 using the units-of-production method. 4. Now, assume the company sells the equipment on December 31, 2019, for $135,000 cash. Prepare the journal entry for the sale of the equipment assuming the company has used the straight-line method of depreciating the equipment.

Name: On September 1, 2018, Gabe's Brewing Co. purchased equipment for $168
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Description: On September 1, 2018, Gabe's Brewing Co. purchased equipment for $168,000.Residual value at the end of an estimated 8-year useful life is expected to be$18,000. The company expects the machine to operate for 20,000 hours. Themachine operated for 1,5

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.

Question

100%

On September 1, 2018, Gabe's Brewing Co. purchased equipment for $168,000.
Residual value at the end of an estimated 8-year useful life is expected to be
$18,000. The company expects the machine to operate for 20,000 hours. The
machine operated for 1,500 and 3,500 hours in 2018 and 2019, respectively.
REQUIRED:
1. Calculate depreciation expense for 2018 and 2019 using the straightline method.
2. Calculate depreciation expense for 2018 and 2019 using the 150% declining
balance method.
3. Calculate depreciation expense for 2018 and 2019 using the units-of-production
method.
4. Now, assume the company sells the equipment on December 31, 2019, for
$135,000 cash. Prepare the journal entry for the sale of the equipment assuming the
company has used the straight-line method of depreciating the equipment.

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