Required: 1-a. Calculate depreciation for Year 2. 1-b. Calculate book value and gain (loss) for sale of Truck on December 31, Year 3. 1-c. Prepare journal entries to record these transactions and events.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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**Title: Calculating Depreciation for Year 2**

This section provides a structured approach to calculate the depreciation for the second year. The table below outlines each step required:

1. **Total Cost:** Enter the initial cost of the asset.

2. **Less Accumulated Depreciation (from Year 1):** Subtract the depreciation accumulated by the end of the first year.

3. **Book Value:** This is calculated by subtracting the accumulated depreciation (from Year 1) from the total cost.

4. **Less Revised Salvage Value:** Deduct any revised salvage value from the book value to determine the eventual loss in value expected over the asset's useful life.

5. **Remaining Cost to be Depreciated:** This is the amount that remains to be depreciated over the remaining lifespan of the asset.

6. **Years of Life Remaining:** Enter the number of years left in the asset’s useful life.

7. **Total Depreciation for Year 2:** Calculate the depreciation for the current year using the remaining cost to be depreciated and the years of life remaining.

To ensure clarity, values corresponding to each of these sections need to be filled appropriately based on the specific asset being evaluated. This template serves as an effective guide for tracking and calculating depreciation in subsequent years.
Transcribed Image Text:**Title: Calculating Depreciation for Year 2** This section provides a structured approach to calculate the depreciation for the second year. The table below outlines each step required: 1. **Total Cost:** Enter the initial cost of the asset. 2. **Less Accumulated Depreciation (from Year 1):** Subtract the depreciation accumulated by the end of the first year. 3. **Book Value:** This is calculated by subtracting the accumulated depreciation (from Year 1) from the total cost. 4. **Less Revised Salvage Value:** Deduct any revised salvage value from the book value to determine the eventual loss in value expected over the asset's useful life. 5. **Remaining Cost to be Depreciated:** This is the amount that remains to be depreciated over the remaining lifespan of the asset. 6. **Years of Life Remaining:** Enter the number of years left in the asset’s useful life. 7. **Total Depreciation for Year 2:** Calculate the depreciation for the current year using the remaining cost to be depreciated and the years of life remaining. To ensure clarity, values corresponding to each of these sections need to be filled appropriately based on the specific asset being evaluated. This template serves as an effective guide for tracking and calculating depreciation in subsequent years.
**Problem 8-5A Computing and Revising Depreciation; Selling Plant Assets**

Yoshi Company completed the following transactions and events involving its delivery trucks.

**Year 1:**
- **Jan. 1:** Paid $20,515 cash plus $1,785 in sales tax for a new delivery truck estimated to have a five-year life and a $2,150 salvage value. Delivery truck costs are recorded in the Trucks account.
- **Dec. 31:** Recorded annual straight-line depreciation on the truck.

**Year 2:**
- **Dec. 31:** The truck's estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,700. Recorded annual straight-line depreciation on the truck.

**Year 3:**
- **Dec. 31:** Recorded annual straight-line depreciation on the truck.
- **Dec. 31:** Sold the truck for $5,600 cash.

**Required:**
1-a. Calculate depreciation for Year 2.
1-b. Calculate book value and gain (loss) for the sale of the truck on December 31, Year 3.
1-c. Prepare journal entries to record these transactions and events.

Complete this question by entering your answers in the tabs below.
Transcribed Image Text:**Problem 8-5A Computing and Revising Depreciation; Selling Plant Assets** Yoshi Company completed the following transactions and events involving its delivery trucks. **Year 1:** - **Jan. 1:** Paid $20,515 cash plus $1,785 in sales tax for a new delivery truck estimated to have a five-year life and a $2,150 salvage value. Delivery truck costs are recorded in the Trucks account. - **Dec. 31:** Recorded annual straight-line depreciation on the truck. **Year 2:** - **Dec. 31:** The truck's estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,700. Recorded annual straight-line depreciation on the truck. **Year 3:** - **Dec. 31:** Recorded annual straight-line depreciation on the truck. - **Dec. 31:** Sold the truck for $5,600 cash. **Required:** 1-a. Calculate depreciation for Year 2. 1-b. Calculate book value and gain (loss) for the sale of the truck on December 31, Year 3. 1-c. Prepare journal entries to record these transactions and events. Complete this question by entering your answers in the tabs below.
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