1 A machine originally had an estimated useful life of 6 years, but after 2 comp
ID: 2421218 • Letter: 1
Question
1
A machine originally had an estimated useful life of 6 years, but after 2 complete years, it was decided that the original estimate of useful life should have been 11 years. At that point the remaining cost to be depreciated should be allocated over the remaining:
2.
Peavey Enterprises purchased a depreciable asset for $28,000 on April 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $3,200, Peavey Enterprises should recognize depreciation expense in Year 2 in the amount of:
3.
Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $108,000. The machine's useful life is estimated to be 4 years, or 140,000 units of product, with a $2,000 salvage value. During its second year, the machine produces 28,000 units of product. Determine the machines' second year depreciation under the units-of-production method. (Do not round intermediate calculations.)
$21,200.
$26,500.
$27,000.
$21,600.
$27,500.
4.
Gaston owns equipment that cost $13,500 with accumulated depreciation of $2,700. Gaston asks $12,700 for the equipment but sells the equipment for $9,700. Which of the following would not be part of the journal entry to record the disposal of the equipment?
Debit Accumulated Depreciation $2,700.
Credit Equipment $13,500.
Debit Loss on Disposal of Equipment $1,100.
Credit Gain on Disposal of Equipment $1,100.
Debit Cash $9,700.
A machine originally had an estimated useful life of 6 years, but after 2 complete years, it was decided that the original estimate of useful life should have been 11 years. At that point the remaining cost to be depreciated should be allocated over the remaining:
2.
Peavey Enterprises purchased a depreciable asset for $28,000 on April 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $3,200, Peavey Enterprises should recognize depreciation expense in Year 2 in the amount of:
Explanation / Answer
1) At that point the remaining cost to be depreciated should be allocated over the remaining 9 years ie ( 11years ( total life) - 2 years ( completed life) 2) Cost of the asset 28000 Salvage value 3200 Useful life 4 years Depricition pa (SLM) = ( Cost of the asset - salvage value) / useful life = ( 28000 - 3200 ) /4 = 6200 In year 2 , the entire years depriciation will be charged , hence value of depriciation in Year 2 = 6200 3) Units of production method of Depriciation Depriciation = Number of units produced /Total life in number of un)its * ( Cost - Salvage Value = 28000 / 140000 * ( 108000 - 2000) =28000/140000 * 106000 = 21200 Hence depiciation for the 2nd year when 28000 units are produced is 21200 4) The journal entry for sale is Cash Dr 9700 Accumulated Depriciation Dr 2700 Loss on sale of Equipment Dr 1100 Equipment Cr 13500 Hence , Credit Gain on disposal of Equipment $ 1100 will not be part of the journal entry This is because the asset is sold at a loss ( as seen above)
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