Explanation Depreciation expense: Depreciation expense is a non-cash expense, which is recorded on the income statement reflecting the consumption of economic benefits of long-term asset on account of its wear and tear or obsolesces. Straight-line depreciation method: The depreciation method which assumes that the consumption of economic benefits of long-term asset could be distributed equally throughout the useful life of the asset is referred to as straight-line method. Sum-of- the-years’ digits method: Sum-of-the years’ digits method determines the depreciation by multiplying the depreciable base and declining fraction. Double-declining-balance method: The depreciation method which assumes that the consumption of economic benefits of long-term asset is high in the early years but gradually declines towards the end of its useful life is referred to as double-declining-balance method. Prepare necessary journal entries of Company D for 2014 through 2017 as follows: Date Account Title & Explanation Debit ($) Credit($) Asset A: 2014 Depreciation expense (2) 1,800 Accumulated depreciation 1,800 (To record the depreciation expense incurred at the end of the accounting year) 2015 Depreciation expense (1) 3,600 Accumulated depreciation 3,600 (To record the depreciation expense incurred at the end of the accounting year) 2016 Depreciation expense (1) 3,600 Accumulated depreciation 3,600 (To record the depreciation expense incurred at the end of the accounting year) 2017 Depreciation expense (2) 1,800 Accumulated depreciation 1,800 (To record the depreciation expense incurred at the end of the accounting year) Cash 7,000 Accumulated depreciation (3) 10,800 Loss on disposal of property, plant and equipment [ $ 20 , 000 − $ 10 , 800 − $ 7 , 000 ] 2,200 Machinery/Equipment 20,000 (To record the sale of Asset A) Asset B: 2015 Depreciation expense (6) 4,444 Accumulated depreciation 4,444 (To record the depreciation expense incurred at the end of the accounting year) 2016 Depreciation expense ( $ 4 , 444 + $ 3 , 889 ) 8,333 Accumulated depreciation 8,333 (To record the depreciation expense incurred at the end of the accounting year) 2017 Depreciation expense ( $ 3 , 889 + $ 3 , 333 ) 7,222 Accumulated depreciation 7,222 (To record the depreciation expense incurred at the end of the accounting year) Asset C: 2016 Depreciation expense (8) 10,000 Accumulated depreciation 10,000 (To record the depreciation expense incurred at the end of the accounting year) 2017 Depreciation expense (9) 18,000 Accumulated depreciation 18,000 (To record the depreciation expense incurred at the end of the accounting year) Table (1) Working note (1): Calculate the annual depreciation expense for Asset A under straight line method . Depreciation expenses = Acquisition cost – Residual value Useful life = $20,000 − $2,000 5 years = $ 3 , 600 per year Working note (2): Calculate the half-year depreciation expense for Asset A under straight line method. Depreciation expenses = [ Acquisition cost – Residual value Useful life × 1 2 ] = $20,000 − $2,000 5 years × 1 2 = $ 1 , 800 Working note (3): Calculate the accumulated depreciation of asset A

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Author: PAGACH

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Chapter 11, Problem 7P

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Prepare necessary journal entries of Company D for 2014 through 2017.

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Chapter 11 Solutions

EBK INTERMEDIATE ACCOUNTING: REPORTING

Ch. 11 - Briefly explain the meaning of the four factors...Ch. 11 - Prob. 2GI Ch. 11 - Would it be desirable to require all companies to...Ch. 11 - What is the depredation base?Ch. 11 - Prob. 5GI Ch. 11 - A company should use an accelerated depreciation...Ch. 11 - Prob. 7GI Ch. 11 - Prob. 8GI Ch. 11 - Prob. 9GI Ch. 11 - Prob. 10GI

Ch. 11 - Under U.S. GAAP, in a year in which the fair value...Ch. 11 - Prob. 12GI Ch. 11 - Prob. 13GI Ch. 11 - Compare the group and composite methods of...Ch. 11 - Prob. 15GI Ch. 11 - Describe the accounting for changes and...Ch. 11 - Prob. 17GI Ch. 11 - Prob. 18GI Ch. 11 - Explain the meaning of an impaired asset and...Ch. 11 - Prob. 20GI Ch. 11 - Prob. 21GI Ch. 11 - Prob. 22GI Ch. 11 - (Appendix 11.1) Why might depreciation on a...Ch. 11 - A method that excludes residual value from the...Ch. 11 - Prob. 2MC Ch. 11 - Prob. 3MC Ch. 11 - Prob. 4MC Ch. 11 - A machine with a 4-year estimated useful life and...Ch. 11 - At the end of the expected useful life of a...Ch. 11 - The composite depreciation method: a. is applied...Ch. 11 - Prob. 8MC Ch. 11 - A fixed asset with a 5-year estimated useful life...Ch. 11 - Crowder Company acquired a tract of land...Ch. 11 - Susquehanna Company purchased an asset at the...Ch. 11 - Akron Incorporated purchased an asset at the...Ch. 11 - Albany Corporation purchased equipment at the...Ch. 11 - Utica Machinery Company purchases an asset for...Ch. 11 - In Year 1, Utica Machinery Company uses the asset...Ch. 11 - At the beginning of Year 1, Herkimer Co....Ch. 11 - At the end of Year 1, Herkimer Co. sells two...Ch. 11 - Buffalo, Inc., uses composite depreciation for its...Ch. 11 - Prob. 9RE Ch. 11 - Assume the same information as in RE11-3, except...Ch. 11 - Oneonta Co. owns equipment with a cost of 300,000...Ch. 11 - At the beginning of the current year, Andy Company...Ch. 11 - Prob. 13RE Ch. 11 - (Appendix 11.1) Auburn Company purchased an asset...Ch. 11 - Gruman Company purchased a machine for 220,000 on...Ch. 11 - Prob. 2E Ch. 11 - Prob. 3E Ch. 11 - Prob. 4E Ch. 11 - Prob. 5E Ch. 11 - Prob. 6E Ch. 11 - Loban Company purchased four cars for 9,000 each...Ch. 11 - Wilcox Company acquires four machines that have...Ch. 11 - Lightning Delivery Company purchased a new...Ch. 11 - Prob. 10E Ch. 11 - Prob. 11E Ch. 11 - Prob. 12E Ch. 11 - Bailand Company purchased a building for 210,000...Ch. 11 - Prob. 14E Ch. 11 - On January 1, 2012, Vallahara Company purchased...Ch. 11 - Prob. 16E Ch. 11 - Prob. 17E Ch. 11 - Prob. 18E Ch. 11 - Prob. 19E Ch. 11 - Prob. 20E Ch. 11 - Prob. 1P Ch. 11 - Prob. 2P Ch. 11 - Prob. 3P Ch. 11 - Prob. 4P Ch. 11 - Prob. 5P Ch. 11 - Prob. 6P Ch. 11 - Prob. 7P Ch. 11 - Prob. 8P Ch. 11 - During 2016, Ryel Companys controller asked you to...Ch. 11 - Prob. 10P Ch. 11 - On January 1, 2011, Borstad Company purchased...Ch. 11 - Prob. 12P Ch. 11 - Prob. 13P Ch. 11 - Prob. 14P Ch. 11 - Prob. 15P Ch. 11 - Prob. 16P Ch. 11 - Prob. 17P Ch. 11 - Prob. 18P Ch. 11 - Prob. 19P Ch. 11 - Prob. 20P Ch. 11 - Prob. 21P Ch. 11 - Prob. 1C Ch. 11 - Prob. 2C Ch. 11 - Straight-Line and Composite Depreciation Portland...Ch. 11 - Depreciation continues to be one of the most...Ch. 11 - The following two statements concern depreciation:...Ch. 11 - Prob. 6C

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Prepare necessary journal entries of Company D for 2014 through 2017.

Solution Summary: The author explains that depreciation expense is a non-cash expense, which is recorded on the income statement reflecting the consumption of economic benefits of long-term asset on account of its wear and tear or obsolesces

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Prepare necessary journal entries of Company D for 2014 through 2017.

Chapter 11 Solutions