9th Edition

ISBN: 9781260679694

Author: SPICELAND

Publisher: MCG

Concept explainers

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 exp…

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…

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Textbook Question

Chapter 11, Problem 11.12E

Depreciation methods; disposal; partial periods

• LO11–2

Howarth Manufacturing Company purchased a lathe on June 30, 2014, at a cost of $80,000. The residual value of the lathe was estimated to be $5,000 at the end of a five-year life. The lathe was sold on March 31, 2018, for $17,000. Howarth uses the straight-line depreciation method for all of its plant and equipment. Partial-year depreciation is calculated based on the number of months the asset is in service.

Required:

1. Prepare a schedule to calculate the gain or loss on the sale.

2. Prepare the journal entry to record the sale.

3. Assuming that Howarth had instead used the sum-of-the-years’-digits depreciation method, prepare the journal entry to record the sale.

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Chapter 11, Problem 11.11E

Chapter 11, Problem 11.13E

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Chapter 11 Solutions

INTERMEDIATE ACCOUNTING (LL) W/CONNECT

Ch. 11 - Prob. 11.1Q Ch. 11 - Depreciation is a process of cost allocation, not...Ch. 11 - Identify and define the three characteristics of...Ch. 11 - Discuss the factors that influence the estimation...Ch. 11 - What is meant by depreciable base? How is it...Ch. 11 - Prob. 11.6Q Ch. 11 - Prob. 11.7Q Ch. 11 - Why are time-based depreciation methods used more...Ch. 11 - Prob. 11.9Q Ch. 11 - Prob. 11.10Q

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Solution Summary: The author explains that depletion is the allocation of cost of natural resources to expense over resource’s the useful time in a systematic and normal manner.

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