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x-n Facebook . Log in or Sic Ac t2206 Registration D x- V. (9 unread)-mkenneh2 New Tab Search ? @ertomheducation.com/hmtpx Question 5 ( value 0.00 points Inwin, Inc, constructed a machine at a total cost of $48 million. Construction was completed at the end of 2012 and the machine was placed in service at the beginning of 2013 The machine was being depreciated over a 10-year life using the straight-ine method. The residual value is expected to be $2 million At the beginning of 2016, Irwin decided to change to the sum-of -the years-digits method gnorning income taxes, prepare the journal entry relating to the machine for 2016. (If no entry is requireed for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50)) Mew transaction list Journal entry worksheet Record the entry relating to the machine for 2016. Note: Enter debits before credits Event Debit Credit Record entry Clear entry View general journal General Jounal Dufficulty 1 EasyExplanation / Answer
Journal Entries for the period 01/01/2016 to 31/12/2017
Working Note
(Book Value - Salvage Value) = Depreciable Cost
$48.00M - $2.00M = $46.00M
1st 3 years Straight Line Method
Year 1 - $48M /10Yr = 4.80
Year 2 - $48M /10Yr = 4.80
Year 3 - $48M /10Yr = 4.80
Total Depreciation given = 4.80+4.80+4.80
= 14.40M
Change to sum of year depreciation ( 7 Years Remaining)
Cost of Equipment.................= $48M
Less: Depreciation to Date....= (14.40M)
Book Value.............................= $33.60M
(Book Value - Salvage Value) = Depreciable Cost
33.60 - 2.00 = 31.60
Serice Life Remaining.....= 7
Sum of Years...................= 7+6+5+4+3+2+1 = 28
Year 4 (7/28 x 31.60) = 7.90
Year 5 (6/15 x 31.60) = 12.64
If you have any doubt or clarification needed....Please let me know
Thank you!
Date Particulars Debit Credit 01/01/2013 Fixed Asset - Machine $ 48.00 Construction in Progress $ 48.00 (Machine construction got completed and being put into use) 31/12/2013 Depreciation Expense $ 4.60 Accumulated Depreciationn $ 4.60 (Depreciation Computed under straight line method) 31/12/2014 Depreciation Expense $ 4.60 Accumulated Depreciation $ 4.60 31/12/2015 Depreciation Expense $ 4.60 Accumulated Depreciation $ 4.60 31/12/2016 Depreciation Expense $ 7.90 Accumulated Depreciation $ 7.90 (Depreciation Computed under sum of year method) 31/12/2017 Depreciation Expense $ 12.64 Accumulated Depreciation $ 12.64Related Questions
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