Assuming the equipment was sold at the end of the second year for $57,0O0. deter

Question

Assuming the equipment was sold at the end of the second year for $57,0O0. determine the gain or loss mi sale of the equipment. Journalize the entry to record the sale. Equipment purchased at the beginning of the fiscal year for $300.000 is expected to have a useful life of 5 years. or 15,000 operating hours, and a residual value of $30.000 Compute the depreciation for the first and second year$ of use by each of the following methods: straight-line units-of-production (5.500 hours first year,3,250 hours second year) declining-balance (Round the answer to the nearest dollar.) Identify each of the following expenditures as chargeable to Land, Land Improvements, Buildings, Machinery and Equipment, or other account. Cost of paving parking area for employees and customers. Insurance during construction of building. Interest incurred on loan during construction of building. Fee paid for installation of equipment. Special foundation for now equipment acquired. Insurance on new equipment while in transit. Freight charges on new equipment. Cost of repairing vandalism damage to equipment during installation. Sales tax on new equipment. Cost incurred in repairing damage resulting from installation of new equipment. Cost of land till for building site. Cost of lubricating oil purchased for periodic oil changes for equipment. Parking lot lighting. Installing a fence around the parking lot. Repainting the trim on a building. Special assessment paid to city for extension of water main to property. Cost of racing and removing the old building on properly acquired for a building site. Delinquent real estate taxes assumed by purchaser on property acquired for a building site. Attorney's fee for title search Architect's fee for building plans and supervision of construction.

Explanation / Answer

Answer.37 Particulars Amount (in $) Cost of Equipment 300000.00 Residual Value 30000.00 Depreciable Value 270000.00 Depreciation by Straight Line Method for 1st & 2nd year = $2,70,000/5 = $54,000 p.a 54000.00 Depreciation by Units of Production Method 1st Year = $270000*5500/15000 99000.00 2nd Year = $270000*3250/15000 58500.00 Depreciation by Declining Balance Method 1st Year = $270000*0.2 54000.00 2nd Year = ($270000 - $54000)*0.2 43200.00 Answer.38 Particulars Chargeable to 1. Cost of paving parking area for employees and customers. Land Improvements 2. Insurance during construction of building. Buildings 3. Interest incurred on loan during construction of building. Buildings 4. Fee paid for installation of equipment. Machinery & Equipment 5. Special foundation for new equipment acquired. Machinery & Equipment 6. Insurance on new equipment while in transit. Machinery & Equipment 7. Freight charges on new equipment. Machinery & Equipment 8. Cost of repairing vandalism damage to equipment during installation. Other account 9. Sales tax on new equipment. Machinery & Equipment 10. Cost incurred in repairing damage resulting from installation of new equipment. Other account 11. Cost of land fill for building site. Land Improvements 12. Cost of lubricating oil purchased for periodic oil changes for equipment. Other account 13. Parking lot lighting. Buildings 14. Installing a fence around the parking lot. Other account 15. Repainting the trim on a building. Other account 16. Special assessment paid to city for extension of water main to property. Buildings 17. Cost of razing and removing the old building on property acquired for a building site. Land Improvements 18. Delinquent real estate taxes assumed by purchaser on property acquired for a building site. Buildings 19. Attorney's fee for a title search. Buildings 20. Architects fee for building plans and supervision of construction. Buildings

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