On April 1, Year 1, SAS Corp. purchased and placed in service a plant asset. The

ID: 2376098 • Letter: O

Question

following information is available regarding the plant asset

Acquisition cost..........................................$130,000

Estimates salvage value..........................$15,000

Estimated useful years.............................5 years

Make the necessary adjusting journal entries at December 31, Year 1, and December 31,

Year 2 to record depreciation for each year under the following depreciation methods:

a. Straight-line.

b. Double-declining-balance.

2004

Depreciation expense 17250

accumulated depreciation 17250

2005

Depreciation expense Debit 23000

accumulated depreciation 23000

double declining

depreciation expense DEbit 34500

accumulated depreciation 34500

2005

depreciation expense debit 40250

accumulated depreciation 40250

note:

depreciation under straight line method=130000-15000/5=23000

year 1=23000*9/12=17250

year2=23000

double declining

year 1= [(130000-150000)/5]*2=46000*9/12=34500

year2= 130000-34500=95500-15000=80500

depreciation=(80500/4)*2=40250

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