The property, plant, and equipment section of the Jasper Company’s December 31,
ID: 2481699 • Letter: T
Question
The property, plant, and equipment section of the Jasper Company’s December 31, 2015, balance sheet contained the following:
The land and building were purchased at the beginning of 2011. Straight-line depreciation is used and a residual value of $30,000 for the building is anticipated.
The straight-line method is used to determine depreciation on the equipment. On March 31, 2016, Machine 102 was sold for $54,000. Early in 2016, the useful life of machine 101 was revised to five years in total, and the residual value was revised to zero.
Prepare the journal entry to record the sale of machine 102. Also prepare the journal entry to record 2016 depreciation on machine 102 up to the date of sale.
Prepare the 2016 year-end adjusting journal entries to record depreciation on the building and equipment.
The property, plant, and equipment section of the Jasper Company’s December 31, 2015, balance sheet contained the following:
Explanation / Answer
1) Depriciation on building Accumulated depriciation for 4 years ( 2011 to 2015) 150000 per annum depriciation on SLM 37500 Machine Cost Date acquired Residual value Life in years Depriciation pa Depriciation upto 2015 Depriciation for 2016 A B C D =(A-B)/C Accumulated depriciation 101 48400 1-Jan-13 6000 8 5300 15900 for 3 years 5300 for full year 102 79000 30-Jun-14 7000 9 8000 12000 for 1.5 year 2000 for 3 months as machins sold on 31/3 16 103 20000 1-Sep-15 2000 8 2250 750 for 4 months 2250 for full year 28650 9550 2) Journal entry Machine Cost Date acquired Residual value Life in years Depriciation pa Depriciation upto 2015 Depriciation for 2016 102 79000 30-Jun-14 7000 9 8000 12000 for 1.5 year 2000 for 3 months as machins sold on 31/3 16 Total depriciation till 31st March 2016 (12000 + 2000) 14000 WDV = Cost - Accumulated depriciation = 79000 - 14000 = 65000 Loss on sale = WDV - Sale price = 65000 - 54000 = 11000 Depriciation expense - equipment Dr 2000 Accumulated depriciation - equipment Cr 2000 ( To record depriciation for 3 months till date of sale) Cash Dr 54000 Loss on sale of equipment Dr 11000 Accumulated depriciation Dr 14000 Equipment Cr 79000 ( To record sale of equipment) 3) Depriciation - Building Dr 37500 Accumulated depriciation - Building Cr 37500 ( To record depriciation for 2016) Depriciation - euipment Dr 9550 Accumulated depriciation - equipment Cr 9550
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