HW Problem 9.2-On April 1\", Dane Company made a group purchase from a company g
ID: 2514834 • Letter: H
Question
HW Problem 9.2-On April 1", Dane Company made a group purchase from a company goimg business. It paid S600,000 for the following items which were appraised at the following valu D. C. Havit a. in b. de c. is d. is Building Land Truck Machine Total $440,000 100,000 40,000 220,000 $800,000 a. Record the journal entry for the purchase on April 1. b. Calculate the amount of depreciation on the building for the first and second years assum ng the The c a. ha b. be c. not d. be double-declining balance method, a life of 40 years, and salvage value of S30,000. (Show your calculations.) Calculate the amount of depreciation on the truck for the first and second years assuming an 8 year life, the straight-line method, and a salvage value of $4,000. (Show your calculations.) Calculate the amount of depreciation for the first and second years on the machine assuming the units of production method, a life of 50,000 machine hours, and a salvage value of $10,000. The equipment was used 8,000 machine hours in the first year and 13,000 machine hours in the second year. (Show your calculations.) c. d. Two inc a. a vi b. a vi c. supp . suppExplanation / Answer
Answer = A) CALCULATION OF THE VALUE OF THE ASSETS Amount ratio Amount (600,000 X Ratio) Building $ 4,40,000 55.00% $ 3,30,000.00 Land $ 1,00,000 12.50% $ 75,000.00 Truck $ 40,000 5.00% $ 30,000.00 Machiene $ 2,20,000 27.50% $ 1,65,000.00 $ 8,00,000 100% $ 6,00,000 Journal Entries Date Account Title and explanation Debit Credit Building $ 3,30,000 Land $ 75,000 Truck $ 30,000 Machiene $ 1,65,000 To Cash $ 6,00,000 Answer = B) CALCULATION OF THE DEPRECIATION AS PER SUM OF DOUBLE DECLINE METHOD Purchase Cost of Building $ 3,30,000.00 Useful Life = 40 years Depreciation per year = $ 8,250.00 (Purchase price / Useful life) OR Rate of Depreciation = 0.0250 2.50% (Depreication / Purchase price ) Double decline deprection rate = 2.5% * 2 = 5.0% Purchase Value of the Building $ 3,30,000.00 Depreciation for the year 1 @ 5% $ 16,500.00 Closing balance for the year 1 $ 3,13,500.00 Opening Balance for the year 2 $ 3,13,500.00 Depreciation for the year 2 @ 5% $ 15,675.00 Closing balance for the year 2 $ 2,97,825.00 Answer = C) CALCULATION OF THE DEPRECIATION AS PER STRAIGHT LINE METHOD FOR THE YEAR 1 & Year 2 Purchase Cost of Truck $ 30,000.00 Less: Salvage Value $ 4,000.00 Net Value for Depreciation $ 26,000.00 Usefule life of the Assets 8 years Depreciation per year = Value for Depreciation / 8 years = 3,250.00 Total Depreciation for the year 1 = 3,250.00 Total Depreciation for the year 2 = $ 3,250.00 Answer = D) CALCULATION OF THE DEPRECIATION PER UNIT Purchase Cost of Machine $ 1,65,000.00 Less: Salvage Value $ 10,000.00 Net Value for Depreciation $ 1,55,000.00 Expected to produce Miless 50,000 Mach Hours Depreciation per MH = $ 3.10000 Per MH ($ 155,000 / 50,000 Units) Depreciation For the Year 1 Number of Units of Productuion 8,000 MH Depreciation Per Units $ 3.10000 Per MH Total Depreciation $ 24,800.00 Depreciation = (Unit Produced * Deprciation Per MH) Depreciation For the Second Year Depreciation For the Year 1 13,000 MH Number of Units of Productuion $ 3.10000 Per MH Total Depreciation $ 40,300.00 Depreciation = (Unit Produced * Deprciation Per MH)
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