osettab-section Tabs book contentsearch bok p. 399) Demonstration Problem On Apr

Question

osettab-section Tabs book contentsearch bok p. 399) Demonstration Problem On April 1, 2015, Jones Industries purchased new equipment at a cost of S The useful life of this equipment was estimated at five years, with a residual value of 325,000. $25,000. Instructions Compute the annual depreciation expense for each year until this equipment becomes fully depreciated under each depreciation method listed below. Because you will record depreciation for only a fraction of a year in 2015, depreciation will extend into 2020 for both methods. Show supporting computations. a. Straight-line, with depreciation for fractional years rounded to the nearest whole month. b. 200 percent declining-balance, with the half-year convention. Limit depreciation in 2020 to an amount that reduces the undepreciated cost to the estimated residual value. c. Assume that the equipment is sold at the end of December 2017 for $178,700 cash. Record the necessary gain or loss resulting from the sale under the straight-line methood.

Explanation / Answer

Part C

Debit Cash A/c $ 178700

Debit Loss on Machinery A/c $ 11300

Credit Machinery A/c $ 190000

Part A

Part B

Straightline Method

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