On March 31, 2013, the Herzog Company purchased a factory complete with machiner

Question

On March 31, 2013, the Herzog Company purchased a factory complete with machinery and equipment. The allocation of the total purchase price of $930,000 to the various types of assets along with estimated useful lives and residual values are as follows: Asset Cost Estimated Residual Value Estimated Useful Life in Years Land $ 135,000 N/A N/A Building 430,000 none 20 Machinery 230,000 12% of cost 10 Equipment 135,000 $ 13,000 4 Total $ 930,000 On June 29, 2014, machinery included in the March 31, 2013, purchase that cost $93,000 was sold for $73,000. Herzog uses the straight-line depreciation method for buildings and machinery and the sum-of-the-years'-digits method for equipment. Partial-year depreciation is calculated based on the number of months an asset is in service. Required: 1. Compute depreciation expense on the building, machinery, and equipment for 2013. (Do not round intermediate calculations.)

Building:

Machinery:

Equipment:

Prepare the journal entry to record the depreciation on the machinery sold on June 29, 2014, and the sale of machinery. (If no entry is required for a transaction, select "No journal entry required" in the first account field.)

Compute depreciation expense on the building, remaining machinery, and equipment for 2014. (Do not round intermediate calculations.)

building

Machinery

Equipment

Explanation / Answer

Solution :

Asset

DEPRECIATION for 2013 (9 month)

BUILDING

16125

(cost - residual value)/useful life

(430000/20)*9/12

Machinery

15180

(cost - residual value)/useful life

((230000*0.88)/10)*9/12

Equipment

36600

(cost - residual value)*remaining useful life/sum of years of digit*

(135000-13000)*(4/10)*(9/12)

*4+3+2+1=10

Journal entry for depreciation on the machinery sold on June 29, 2014

Depreciation

4092

    accumulated depreciation

4092

((93000*0.88)/10)*6/12

jounal entry for sale of machinery

cash

73000

accumulated depreciation ((93000*0.88)/10)*15/12

10230

Loss on sale of machinery (93000-10230-73000)

9770

    machinery

93000

Asset

DEPRECIATION 2014

BUILDING

21500

(430000/20)

Machinery

12056

((230000-93000)*0.88)/10

Equipment

36600

(135000-13000)*(3/10)

Asset

DEPRECIATION for 2013 (9 month)

BUILDING

16125

(cost - residual value)/useful life

(430000/20)*9/12

Machinery

15180

(cost - residual value)/useful life

((230000*0.88)/10)*9/12

Equipment

36600

(cost - residual value)*remaining useful life/sum of years of digit*

(135000-13000)*(4/10)*(9/12)

*4+3+2+1=10

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.