GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD

9th Edition

ISBN: 9781260089042

Author: J. David Spiceland

Publisher: McGraw-Hill Education

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Depreciation Methods

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 11.4P

Partial- year depreciation; asset addition; increase in useful life

• LO11–2, LO11–5, LO11–9

On April 1, 2016, the KB Toy Company purchased equipment to be used in its manufacturing process. The equipment cost $48,000, has an eight-year useful life, and has no residual value. The company uses the straight-line depreciation method for all manufacturing equipment.

On January 4, 2018, $12,350 was spent to repair the equipment and to add a feature that increased its operating efficiency. Of the total expenditure, $2,000 represented ordinary repairs and annual maintenance and $10,350 represented the cost of the new feature. In addition to increasing operating efficiency, the total useful life of the equipment was extended to 10 years.

Required:

Prepare journal entries for the following:

1. Depreciation for 2016 and 2017

2. The 2018 expenditure

3. Depreciation for 2018

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Chapter 11, Problem 11.3P

Chapter 11, Problem 11.5P

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Chapter 11 Solutions

GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD

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 depreciation is a method of distributing the cost of fixed assets over its estimated useful life.

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Chapter 11 Solutions