Oriole Machining purchased the assets of an existing business on June 30, 2020. It immediately started operations and has a calendar year end. The trial balance of Oriole Machining at December 31, 2021 shows the following: Land Building Accumulated depreciation - building Equipment Accumulated depreciation - equipment Land improvements Accumulated depreciation - land improvements The accounting policies chosen for the property, plant, and equipment assets and the relevant information concerning the calculation of depreciation follows. Straight-line Diminishing balance -25% Diminishing balance - 15% rate Building Equipment Land improvements Residual value - Building Residual value Equipment Residual value-Land Improvements $43,000 242,000 25,800 Useful life - Building Useful life Equipment Useful life-Land Improvements Events and transactions for 2022 follow. 132,000 45,375 22,000 4,703 $70,000 10% of cost 0 10 Years 8 Years 5 Years 1. On January 4, 2022, Oriole replaced a motors on one of the larger pieces of equipment at a cost of $16,500. The cost of the old motor removed could not be determined. The replacement motor will operate using half of the electricity that was consumed by the old motor. The useful life and the residual value of all of the equipment did not change as a result of this addition. 2. On May 1, 2022, after unusual spring flooding, Oriole had to replace the parking lot, which was the only item in the land improvements account. The cost to replace was $32,000. The new parking lot is expected to have a useful life of 10 years, with no residual value. *(a) Record the transactions that occurred during 2022. (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. Round answers to 0 decimal places, eg. 5,275.)
Oriole Machining purchased the assets of an existing business on June 30, 2020. It immediately started operations and has a calendar year end. The trial balance of Oriole Machining at December 31, 2021 shows the following: Land Building Accumulated depreciation - building Equipment Accumulated depreciation - equipment Land improvements Accumulated depreciation - land improvements The accounting policies chosen for the property, plant, and equipment assets and the relevant information concerning the calculation of depreciation follows. Straight-line Diminishing balance -25% Diminishing balance - 15% rate Building Equipment Land improvements Residual value - Building Residual value Equipment Residual value-Land Improvements $43,000 242,000 25,800 Useful life - Building Useful life Equipment Useful life-Land Improvements Events and transactions for 2022 follow. 132,000 45,375 22,000 4,703 $70,000 10% of cost 0 10 Years 8 Years 5 Years 1. On January 4, 2022, Oriole replaced a motors on one of the larger pieces of equipment at a cost of $16,500. The cost of the old motor removed could not be determined. The replacement motor will operate using half of the electricity that was consumed by the old motor. The useful life and the residual value of all of the equipment did not change as a result of this addition. 2. On May 1, 2022, after unusual spring flooding, Oriole had to replace the parking lot, which was the only item in the land improvements account. The cost to replace was $32,000. The new parking lot is expected to have a useful life of 10 years, with no residual value. *(a) Record the transactions that occurred during 2022. (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. Round answers to 0 decimal places, eg. 5,275.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
Subject - Acounting
Transcribed Image Text:Oriole Machining purchased the assets of an existing business on June 30, 2020. It immediately started operations and has a calendar year end. The trial balance of Oriole Machining at December 31, 2021 shows the
following:
Land
Building
Accumulated depreciation - building
Equipment
Accumulated depreciation equipment
Land improvements
Accumulated depreciation - land improvements
The accounting policies chosen for the property, plant, and equipment assets and the relevant information concerning the calculation of depreciation follows.
Straight-line
Diminishing balance - 25%
Diminishing balance - 15%
rate
Building
Equipment
Land improvements
Residual value Building
Residual value-Equipment
Residual value - Land Improvements
$43,000
242,000
25,800
132,000
45,375
22,000
4,703
Equipment
$70,000
10% of cost
0
10 Years
8 Years
5 Years
Useful life Building
Useful life
Useful life Land Improvements
Events and transactions for 2022 follow.
1. On January 4, 2022, Oriole replaced a motors on one of the larger pieces of equipment at a cost of $16,500. The cost of the old motor removed could not be determined. The replacement motor will operate
using half of the electricity that was consumed by the old motor. The useful life and the residual value of all of the equipment did not change as a result of this addition.
2.
On May 1, 2022, after unusual spring flooding, Oriole had to replace the parking lot, which was the only item in the land improvements account. The cost to replace was $32,000. The new parking lot is expected
to have a useful life of 10 years, with no residual value.
*(a)
Record the transactions that occurred during 2022. (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. Round answers to 0 decimal places, eg. 5,275.)
Date Account Titles and Explanation
Debit
Credit
Transcribed Image Text:Record the transactions that occurred during 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manual
the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
Debit
Credit
Date Account Titles and Explanation
Jan. 4, 2022
May 1, 2022
May 1, 2022
May 1, 2022
(To record depreciation expense)
(To record retirement of land improvement)
(To record costs to resurface)
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