Depreciation must be recorded for the year given the following information: Asse
ID: 2529968 • Letter: D
Question
Depreciation must be recorded for the year given the following information:
Assets Acquisition Date Cost Estimated Life Salvage Depreciation Method
Building 7/1/08 $306,000 25 years $20,000 straight-line
Star ship #1 4/1/09 $28,000 60,000 parsecs $3,100 units of production (parsecs) (7,000 parsecs this yr.)
Star ship #2 9/1/11 $33,000 60,000 parsecs $4,200 units of production (parsecs) (6,000 parsecs this yr.)
Star Destroyer #2 3/29/09 $40,000 10 years $5,000 straight-line
Star Destroyer #3 9/16/10 $43,000 10 years $5,500 straight-line
Office Equipment 11/15/09 $32,800 7 years $0 straight-line
Supercomputer 12/21/14 $18,000 4 years $300 Double Declining Balance
(note: the company takes 1/2 year's depreciation in the year of acquisition)
Round to the nearest dollar for total depreciation.
Depreciation Expense: Debit #
Accumulated Depreciation Building: Credit #
Accumulated Depreciation Equipment: Credit #
Accumulated Depreciation Spaceships: Credit #
Explanation / Answer
Answer
Straight Line Method assets
Cost (A)
Salvage value (B)
Depreciable base (C=A - B)
Life (in years) / Units of production
Annual SLm Depreciation
Building
$ 3,06,000.00
$ 20,000.00
$ 2,86,000.00
25
$ 11,440.00
Star Destroyer #2
$ 40,000.00
$ 5,000.00
$ 35,000.00
10
$ 3,500.00
Star Destroyer #3
$ 43,000.00
$ 5,500.00
$ 37,500.00
10
$ 3,750.00
Office Equipment
$ 32,800.00
$ -
$ 32,800.00
7
$ 4,685.71
Units of production method
Cost (A)
Salvage value (B)
Depreciable base (C=A - B)
Units of Production total expected
Depreciation per parsecs
No. of parsecs
Annual Depreciation
StarShip #1
$ 28,000.00
$ 3,100.00
$ 24,900.00
60000
$ 0.42
7000
$ 2,905.00
StarShip #2
$ 33,000.00
$ 4,200.00
$ 28,800.00
60000
$ 0.48
6000
$ 2,880.00
Double Declining Method Asset
A
Cost of SuperComputer
$ 18,000.00
B
Residual Value
$ 300.00
C=A - B
Depreciable base
$ 17,700.00
D
Life [in years]
4
E=C/D
Annual SLM depreciation
$ 4,425.00
F=E/C
SLM Rate
25.00%
G=F x 2
DDB Rate
50.00%
Year
Beginning Book Value
Depreciation rate
Depreciation expense
1
$ 18,000.00
50.00%
9000
Depreciation expense
Building:
$ 11,440.00
TOTAL (A)
$ 11,440.00
Equipments:
Supercomputer
$ 4,500.00 [$9000 x 50%]
Office Equipment
$ 4,685.71
TOTAL (B)
$ 9,185.71
Spaceships:
StarShip #1
$ 2,905.00
StarShip #2
$ 2,880.00
Star Destroyer #2
$ 3,500.00
Star Destroyer #3
$ 3,750.00
TOTAL (C )
$ 13,035.00
Total Depreciation expense
$ 33,660.71
Accounts Titles
Debit
Credit
Depreciation expense
$ 33,660.71
Accumulated Depreciation-Building
$ 11,440.00
Accumulated Depreciation-Equipment
$ 9,185.71
Accumulated Depreciation-Spaceships
$ 13,035.00
Cost (A)
Salvage value (B)
Depreciable base (C=A - B)
Life (in years) / Units of production
Annual SLm Depreciation
Building
$ 3,06,000.00
$ 20,000.00
$ 2,86,000.00
25
$ 11,440.00
Star Destroyer #2
$ 40,000.00
$ 5,000.00
$ 35,000.00
10
$ 3,500.00
Star Destroyer #3
$ 43,000.00
$ 5,500.00
$ 37,500.00
10
$ 3,750.00
Office Equipment
$ 32,800.00
$ -
$ 32,800.00
7
$ 4,685.71
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