The property, plant, and equipment section of the Jasper Company’s December 31,
ID: 2548247 • 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 $35,000 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 $49,500. Early in 2016, the useful life of machine 101 was revised to seven years in total, and the residual value was revised to zero.
Calculate the accumulated depreciation on the equipment at December 31, 2015.
2. 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
3. Prepare the 2016 year-end adjusting journal entries to record depreciation on the building and equipment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Property, plant, and equipment: Land $ 115,000 Building $ 735,000 Less: Accumulated depreciation (175,000 ) 56 0,000 Equipment 166,125 Less: Accumulated depreciation ? ? Total property, plant, and equipment ?Explanation / Answer
1.
Depreciation under Straight line method = (Cost - Residual value) / Useful life
Depreciation per year for Machine 101 = (64,500 - 6,500) / 10 = 5,800
Accumulated depreciation on Machine 101 at December 31, 2015 = 5,800 * 3 = 17,400
Depreciation on Machine 102 for 2014 = (75,500 - 7,500) / 8 * 6 / 12 = 4,250
Depreciation on Machine 102 for 2015 = (75,500 - 7,500) / 8 = 8,500
Accumulated depreciation on Machine 102 at December 31, 2015 = 8,500 + 4,250 = 12,750
Depreciation on Machine 103 = (26,125 - 2,500) / 9 * 4 / 12 = 875
Accumulated depreciation on Machine 103 at December 31, 2015 = 875
Accumulated depreciation on the Equipment at December 31, 2015 = 17,400 + 12,750 + 875 = 31,025
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2.
Depreciation on Machine 102 for 2016 = (75,500 - 7,500) / 8 * 3 / 12 = 2,125
Journal entry for Depreciation
Accumulated depreciation = 12,750 + 2,125 = 14,875
Journal entry for sale of Equipment
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3.
Accumulated depreciation on Machine 101 before the changes = 17,400
Book value = Cost - Accumulated depreciation = 64,500 - 17,400 = 47,100
Depreciation per year from 2016 = (47,100 - 0) / 4 = 11,775
Depreciation per year on Building = accumulated depreciation / years depreciated
= 175,000 / 5
= 35,000
Date Particulars Debit Credit March 31, 2016 Depreciation expense 2,125 Accumulated depreciation 2,125Related Questions
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