
Concept explainers
Introduction:
Asset is a term used to define a resource owned by a company against which some income will earn in near future and that income will expressed in monetary terms. Recording of an asset is done via
To determine:
Journalize the entries of the events occurred

Explanation of Solution
Journal entry will be recorded as under:
In the books of Yoshi company
| | | $ | $ |
01.01.2014 | Truck A/c | Dr. | 22000 | |
| To Cash A/c | Cr. | | 22000 |
| (Being asset recorded) | | | |
| | | | |
31.12.2014 | Depreciation Expense A/c | Dr. | 4000 | |
| To | Cr. | | 4000 |
| (Being Depreciation on Asset (Truck) recorded) | | | |
| | | | |
31.12.2015 | Depreciation Expense A/c | Dr. | 5200 | |
| To Accumulated Depreciation A/c | Cr. | | 5200 |
| (Being Depreciation on Asset (Truck) recorded) | | | |
| | | | |
31.12.2016 | Depreciation Expense A/c | Dr. | 5200 | |
| To Accumulated Depreciation A/c | Cr. | | 5200 |
| (Being Depreciation on Asset (Truck) recorded) | | | |
| | | | |
31.12.2016 | Cash A/c | Dr. | 5300 | |
| Loss on sale of Truck A/c | Dr. | 2300 | |
| To Trucks A/c | Cr. | | 7600 |
| (Being Truck sold in cash recorded) | | | |
Explanation:
Year 2014
Given:
Cost of Asset for the year 2014 is $ 22000,
Residual value is $ 2000,
Useful life of Truck is 5 Years
Formula used:
For computation of cost of Truck
Cost of Truck | $ |
Original value of asset at the beginning of year | xxxx |
Add: Expenditure capitalized during the year | xxxx |
Less: Depreciation for the year | xxxx |
Asset value at the end of year | xxxx |
For calculating Depreciation under straight line method
Cost of Asset- Residual Value
Useful life of Asset
Calculation:
*Computation of Cost of Truck
Cost of Truck | $ |
Cash | 20515 |
Sales tax | 1485 |
Total | 22000 |
$ 22000- $ 2000
5
$ 20000/5
$ 4000
Year 2015
Given:
Cost of Asset for the year 2015 is $ 18000,
Residual value is $ 2400,
Useful life of truck reduced from 5 years to 4 years, as one year already passed so remaining useful life is 3 years in the year 2015
Formula used:
For computation of cost of Truck
Cost of Truck | $ |
Original value of asset at the beginning of year | xxxx |
Add: Expenditure capitalized during the year | xxxx |
Less: Depreciation for the year | xxxx |
Asset value at the end of year | xxxx |
For calculating Depreciation under straight line method
Cost of Asset- Residual Value
Useful life of Asset
Calculation:
*Computation of Cost of Truck
Cost of Truck | $ |
Asset value in the year 2014 | 22000 |
Less: Depreciation for the year 2014 | 4000 |
Asset value at the beginning of year 2015 | 18000 |
$ 18000- $ 2400
3
$ 15600/3
$ 5200
Year 2016
Given:
Cost of Asset for the year 2016 is $ 12800,
Residual value is $ 2400,
Remaining useful life of Truck is 2 years in year 2016
Formula used:
For computation of cost of Truck
Cost of Truck | $ |
Original value of asset at the beginning of year | xxxx |
Add: Expenditure capitalized during the year | xxxx |
Less: Depreciation for the year | xxxx |
Asset value at the end of year | xxxx |
For calculating Depreciation under straight line method
Cost of Asset- Residual Value
Useful life of Asset
Formula for calculating profit or loss on sale of asset
Calculation of profit or loss on sale of asset | $ |
Original value of asset | xxxx |
Less: Depreciation for the used period | xxxx |
Asset value at the time of sale | xxxx |
Less: Sale value | xxxx |
Profit / Loss on sale of Asset | xxxx |
Calculation:
*Computation of Cost of Truck
Cost of Truck | $ |
Asset value in the year 2015 | 18000 |
Less: Depreciation for the year 2015 | 5200 |
Asset value at the beginning of year 2016 | 12800 |
$ 12800- $ 2400
2
$ 10400/2
$ 5200
*Computation of Cost of Truck at the time of sale
Cost of Truck | $ |
Truck value at the beginning of year 2016 | 12800 |
Less: Depreciation for the year 2016 | 5200 |
Truck value at the time of sale | 7600 |
Sale of Truck in Cash | 5300 |
Loss on sale of Truck ($ 7600- $ 5300) | 2300* |
*Loss on sale of truck will be recorded as expenses under Profit & Loss A/c
Events and transaction are recorded in the form of journal entries as and when it occurred.
Want to see more full solutions like this?
Chapter 10 Solutions
FUND.ACCT.PRIN -ONLINE ONLY >I<
- Cash Accounts Receivable Supplies Prepaid Insurance Equipment Notes Payable Accounts Payable The Lexington Group Unadjusted Trial Balance May 31, 2016 Debit Balances Credit Balances 20,350 37,000 1,100 200 171,175 36,000 26,000 Common Stock 50,000 Retained Earnings 94,150 Dividends 15,000 Fees Earned 429,850 Wages Expense 270,000 Rent Expense 63,000 Advertising Expense 25,200 Miscellaneous Expense 5,100 608,125 636,000arrow_forwardTrial Balance Rocky Mountain Tours Co. is a travel agency. The nine transactions recorded by Rocky Mountain Tours during June 20Y2, its first month of operations, are indicated in the following T accounts: Cash (1) 40,000 (2) 4,000 (7) 13,100 (3) 5,000 (4) 6,175 (6) 6,000 (9) 1,500 Equipment (3) 15,000 Dividends (9) 1,500 Accounts Receivable Accounts Payable Service Revenue (5) 20,500 (7) 13,100 (6) 6,000 (3) 10,000 (5) 20,500 Supplies (2) 4,000 (8) 2,200 Common Stock Operating Expenses (1) 40,000 (4) 6,175 (8) 2,200arrow_forwardQ1: Wyatt Company had three intangible assets at the end of 2024 (end of the fiscal year): Computer software and Web development technology purchased on January 1, 2024, for $70,000. The technology is expected to have a useful life of four years. A patent purchased from R. Jay on January 1, 2024 for a cash cost of $6,000. Jay had registered the patent with the Canadian Intellectual Property Office seven years earlier on January 1, 2017. The cost of the patent is amortized over its legal life. A trademark that was internally developed and registered with the Canadian government for $13,000 on November 1, 2023. Management decided that the trademark has an indefinite life. Required: 1. What is the acquisition cost of each intangible asset? tech 70k patent 6k trademark 13k 2. Compute the amortization of each intangible asset at December 31, 2024. The company does not use contra accounts. (Round the final answers to the nearest whole dollar.) tech 17.5k patent: ???? 3-a.…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





