8. JWPS uses the Double Decining Balanee method of depreciation. fiscal year end

Question

8. JWPS uses the Double Decining Balanee method of depreciation. fiscal year end is Dec 31.. 2009 duiy 1, Purchased a cmputer from C $1500 in cash. bec.31Recorded 9009 dep od estimated salvage value of 900. Incured Odinary epairs on computer of?500. 56 C on the basis of a -flue-jear life Dee st, Recorded 2010 depreciation Paid $ l,50o -for a mojor sparade of the ad to Increase+ ecSl, Recorded 20l deprecia- tion choye "Straight-line methodh 2012 may1, sold the Computer 5o0 campter at $2,000 in eash Jaurnalise transactions and snow calad ations. Cash

Explanation / Answer

CALCULATION OF THE DEPRECIATION AS PER SUM OF DOUBLE DECLINE METHOD Purchase Cost of Machine $                        4,500 Useful Life = 5 years Depreciation per year = $                            900 (Purchase price / Useful life) CALCULATION OF THE RATE OF DEPRECIATION Rate of Depreciation = $ 900 / $ 4,500 (Depreication / Purchase price ) Rate of Depreciation = 0.20 or 20% Double decline deprection rate = 20% * 2 = 40% Purchase price = $                        4,500 Depreciation for the year 2009 @ 20% (40% X 6/12)= $                            900 Closing balance for the year 2015 $                        3,600 Opening Balance for the year 2010 $                        3,600 Depreciation for the year 2010 @40% = $                        1,440 Closing Balabce $                        2,160 Opening balance of for the year 2011 =                      2,160.00 Add: Major Repair of the computer (Allowed for Depreciation)                      1,500.00 Revise Opening balance of for the year 2011 =                      3,660.00 Less : Salvage Value                          900.00 Value for the depciation as per SLM                      2,760.00 Balance Useful Life of the Computer = 3.5 Years   Depreciation per year 2011 =                                789 Opening Balance for the year 2011= Revise Opening balance of for the year 2011 =                      2,700.00 Depreciation Per year =                                789 Closing Balance for the year 2011=                            1,911 Opening Balance for the year 2012= Revise Opening balance of for the year 2011 =                            1,911 Depreciation of the year = $ 789 X 4/12)                                263 Book Value as on the May 01, 2012                            1,649 Less: Selling price =                            2,000 Gain on Sale of computer                                351 Journal Entries Date Account Title and explanation Debit Credit July, 01 2009 Computer $                        4,500       To cash $                       4,500 Repair and maintenance Expenses $                            500 Nov 03 , 2009          To Cash $                          500 Depreciation $                            900 Dec 31, 2009      To Computer $                          900 Depreciation $                        1,440 Dec 31, 2010      To Computer $                       1,440 Depreciation $                            263 May 01, 2011      To Computer $                          263 May 01, 2011 Cash $                        2,000       To Computer $                       1,649        To Gain on sale of Computer $                          351

Related Questions

Navigate

• Browse (All)
• Browse 8
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.