3. Exercise 11-9 Group depreciation [LO11-2] Highsmith Rental Company purchased
ID: 2358330 • Letter: 3
Question
3.
Exercise 11-9 Group depreciation [LO11-2]
Highsmith Rental Company purchased an apartment building early in 2013. There are 20 apartments in the building and each is furnished with major kitchen appliances. The company has decided to use the group depreciation method for the appliances. The following data are available:
In 2016, two new refrigerators costing $3,900 were purchased for cash. The old refrigerators, which originally cost $3,900, were sold for $1,400.
Calculate the group depreciation rate, group life, and depreciation for 2013.
Prepare the journal entries to record the purchase of the new refrigerators and the sale of the old refrigerators. (If no entry is required for a particularevent, select "No journal entry required" in the first account field.)
Highsmith Rental Company purchased an apartment building early in 2013. There are 20 apartments in the building and each is furnished with major kitchen appliances. The company has decided to use the group depreciation method for the appliances. The following data are available:
Explanation / Answer
asset cost residualvalue depreciable val
stoves 39,000 3,000 36,000
refrigerators 34,000 4,000 30,000
dish washers 32,000 3,000 29,000
Totals $105,000 $10000 $95,000
--------------------------------------------
estimated life deprec per year
6 6000
5 6000
4 7250
$19250
----------------------------------------------------
Group depreciation rate
= $ 19,250 / 105,000
= 18.3%
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Group life
$95,000 / 19,250
= 4.9 years
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