Concept explainers
Disposal of property, plant, and equipment; partial periods
• LO11–2
On July 1, 2013, Farm Fresh Industries purchased a specialized delivery truck for $126,000. At the time, Farm Fresh estimated the truck to have a useful life of eight years and a residual value of $30,000. On March 1, 2018, the truck was sold for $58,000. Farm Fresh uses the
Required:
1. Prepare the
2. Prepare the journal entry to record the sale of the truck.
3. Assuming that the truck was sold for $80,000, prepare the journal entry to record the sale.
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Intermediate Accounting
- Current Attempt in Progress X Your answer is incorrect. Metlock Company purchased equipment for $285,600 on October 1, 2025. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $12,000. Estimated production is 48,000 units and estimated working hours are 19,000. During 2025, Metlock uses the equipment for 530 hours and the equipment produces 1,100 units. Compute depreciation expense under each of the following methods. Metlock is on a calendar-year basis ending December 31. (Round rate per hour and rate per unit to 2 decimal places, e.g. 5.35 and final answers to O decimal places, e.g. 45,892.) (a) (b) (c) Straight-line method for 2025 (e) Activity method (units of output) for 2025 Activity method (working hours) for 2025 (d) Sum-of-the-years'-digits method for 2027 Double-declining-balance method for 2026 $ ta tA LA 8531 5.69 7615 51187 66797arrow_forwardRequired information Exercise 11-1 (Algo) Depreciation methods [LO11-2] [The following information applies to the questions displayed below.] On January 1, 2024, the Excel Delivery Company purchased a delivery van for $35,850. At the end of its five-year service life, it is estimated that the van will be worth $3,000. During the five-year period, the company expects to drive the van 109,500 miles. Required: Calculate annual depreciation for the five-year life of the van using each of the following methods. Exercise 11-1 (Algo) Part 3 3. Units of production using miles driven as a measure of output, and the following actual mileage: Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Depreciation Year Miles 2024 23,900 $ 2025 25,900 2026 16,900 2027 29,500 7,170 7,770 5,070 8,850 2028 15,300 Total $ 28,860arrow_forwardPlease don't provide answer in image format thank youarrow_forward
- UWorld ROGER mos6 as BARRAD Multiple Choice O O X Company had been depreciating a machine with an original cost of $125,000 and a salvage value of $15,000 over its estimated useful life of 10 years using straight line depreciation. At the beginning of the seventh year, X Company determined that the machine will actually remain in use for a total of 12 years and will have a salvage value of $5,000 How much depreciation will X Company recognize in the seventh year? O $9,167 $7,333 $9,000 CPA Review O $10,000 Soved Help Save & Exitarrow_forwardNonearrow_forwardnku.3arrow_forward
- View Policies Current Attempt in Progress Teal Mountain Inc. purchased a tractor trailer for $152000. Teal Mountain uses the units-of-activity method for depreciating its trucks and expects to drive the truck 1000000 miles over its 12-year useful life. Salvage value is estimated to be $16000. If the truck is driven 76000 miles in its first year, how much depreciation expense should Teal Mountain record? O $11721. O $10336. O $11552. O $9589. Save for Later Attempts: 0 of 1 used Submit Answerarrow_forwardvi.2arrow_forwardQ-5 Cactus Inc. purchased a machine on January 1, 2022, at a cost of $60,000. The machine is expected to have an estimated residual value of $5,000 at the end of its five-year useful life. The company capitalized the machine and depreciated it in 2022 using the double-declining-balance method of depreciation. The company has a policy of using the straight-line method to depreciate equipment, as this method best reflects the benefits to the company over the life of its machinery. However, the company accountant neglected to follow company policy when he used the double-declining-balance method. Net income for the year ended December 31, 2022, was $53,000 as a result of depreciating the machine incorrectly. Cactus has not closed its books for 2022 yet. Cactus uses IFRS to prepare its financial statements. Required Using the method of depreciation that the company normally follows, prepare the correcting entry and determine the corrected net income. Assume the books of account have not…arrow_forward
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