On March 10, 2016, Lost World Company sells equipment that it purchased for $192

Question

On March 10, 2016, Lost World Company sells equipment that it purchased for $192,000 on August 20, 2009. It was originally estimated that the equipment would have a life of 12 years and a salvage value of $16,800 at the end of that time, and depreciation has been computed on that basis. The company uses the straight-line method of depreciation.

Compute the depreciation charge on this equipment for 2009, for 2016, and the total charge for the period from 2010 to 2015, inclusive, under each of the six following assumptions with respect to partial periods. (Round answers to 0 decimal places, e.g. 45,892. Do not leave any answer field blank. Enter 0 for amounts.)

2009

2010-2015 Inclusive

2016

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2009

2010-2015 Inclusive

2016

(1) Depreciation is computed for the exact period of time during which the asset is owned. (Use 365 days for the base.)

$

$

$

(2) Depreciation is computed for the full year on the January 1 balance in the asset account.

$

$

$

(3) Depreciation is computed for the full year on the December 31 balance in the asset account.

$

$

$

(4) Depreciation for one-half year is charged on plant assets acquired or disposed of during the year.

$

$

$

(5) Depreciation is computed on additions from the beginning of the month following acquisition and on disposals to the beginning of the month following disposal.

$

$

$

(6) Depreciation is computed for a full period on all assets in use for over one-half year, and no depreciation is charged on assets in use for less than one-half year. (Use 365 days for the base.)

$

$

$

Explanation / Answer

2009 2009 2010-2015 Inclusive 14600*5 2016 2016 -1 Depreciation is computed for the exact period of time during which the asset is owned. (Use 365 days for the base.) $ No. of days from March 10 to Dec 3114600*297/365 11880 87600 -2 Depreciation is computed for the full year on the January 1 balance in the asset account. $ As purchased In March 0 87600 -3 Depreciation is computed for the full year on the December 31 balance in the asset account. $ 14600 87600 -4 Depreciation for one-half year is charged on plant assets acquired or disposed of during the year. $ 14600/2 7300 87600 -5 Depreciation is computed on additions from the beginning of the month following acquisition and on disposals to the beginning of the month following disposal. $ As purchased In March so depreciation is counted from April 10 months 12167 87600 8517 So for jan-July depreciation is charged for 7 months -6 Depreciation is computed for a full period on all assets in use for over one-half year, and no depreciation is charged on assets in use for less than one-half year. (Use 365 days for the base.) $ As purchased In March so used more than half year 14600 87600 14600 As used for more than half year i.e till Aug 20 Calculation Of Depreciation= Cost-Salvage Value/No.of years 14600 per year (192000-16800)/12

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