Required: 1. Compute depreciation expense on the building, equipment, and vehicles for 2021. 2. Prepare the journal entries to record the depreciation on the equipment sold on June 29, 2022, and the sale of equipment. 3. Compute depreciation expense on the building, remaining equipment, and vehicles for 2022.
On March 31, 2021, the Herzog Company purchased a factory complete with vehicles and equipment. The allocation of the total purchase price of $920,000 to the various types of assets along with estimated useful lives and residual values are as follows:
| Asset | Cost | Estimated Residual Value | Estimated Useful Life (in years) |
|||||||
| Land | $ | 140,000 | N/A | N/A | ||||||
| Building | 420,000 | none | 25 | |||||||
| Equipment | 206,000 | 10% of cost | 6 | |||||||
| Vehicles | 154,000 | $ | 14,000 | 10 | ||||||
| Total | $ | 920,000 | ||||||||
On June 29, 2022, equipment included in the March 31, 2021, purchase that cost $92,000 was sold for $72,000. Herzog uses the
Required:
1. Compute depreciation expense on the building, equipment, and vehicles for 2021.
2. Prepare the
3. Compute depreciation expense on the building, remaining equipment, and vehicles for 2022.
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