11. Ping Inc. purchased a depreciable asset for $400,000 on Jan 1, 2012. The est
ID: 2576254 • Letter: 1
Question
11. Ping Inc. purchased a depreciable asset for $400,000 on Jan 1, 2012. The estimated salvage value is $40,000, and the estimated useful life is 9 years. The straight-line method is used for depreciation. In 2015 (the beginning of the 4th year), Ping Inc changed its estimates to a total useful life of 5 years with a salvage value of $60,000. What is 2015 depreciation expense?
Answer Choices : A) $40,000, B) $110,000, C) $60,000, D) $120,000
Please show all work. Thank you!
1. Jonathan traded in a manual pressing machine for an automated pressing machine and paid $40,500 cash. The old machine cost S466,000 and had accumulated depreciation of $135,000 up to that date and had a net book value of S331,000. The old machine had a fair value of S295,000. Which of the following is the correct journal entry to record the exchange assuming a lack of commercial substance? A Equipment (new) 641,500 Accum. Deprec. (old) Equipment (old) Cash 135,000 466,000 40,500 40,500 295,000 36,000 135,000 B Cash Equipment (new) Loss on Disposal Accum. Deprec. (old) Equipment (new) 506,500 335,500 36,000 135,000 C Equipment (new) Loss on Disposal Accum. Deprec. (old) Equipment (new) Cash 466,000 40,500Explanation / Answer
Cost of asset as on Jan 1, 2012 = 400000
Estmeted salvage value = 40000
Estimated useful life = 9 years
Depreciation amount = (400000 - 40000)/9 = 40000
Book value of asset in the beginning of the 4th year = Cost of asset - Depreciation for 3 years
= 400000 - (40000*3) = 400000 - 120000 = 280000
Remaining useful life = 5 - 3 = 2 years
Revised salvage value = 60000
Depreciation Expense = (280000 - 60000)/2 = 110000
So, answer is B) $110,000
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