Compute the revised annual depreciation on each asset in 2014. (Show computation
ID: 2500652 • Letter: C
Question
Compute the revised annual depreciation on each asset in 2014. (Show computations.) Prepare the entry (or entries) to record depreciation on the building in 2014. Presented below are selected transaction at Ridge Company for 2014. Retired a piece of machinery that was purchased on January 1, 2014. The machine cost $62,000 on that date. It had a usefull life of 5 year with no salvage value. The computer was sold for $14,000. Discarded a delivery truck that was purchased on January 1, 2010. The truck cost $33,000. It was depreciated based on a 6-year usefull life with a $3,000 salvage value.Explanation / Answer
1. Date of purchase : January 1 . 2014
Cost : 62,000
Life : 10 years
Salvage value : Nil
Depreciation : 62,000 / 10 = 6,200
2014 depreciation : 6,200 /-
2. Date of purchase : January 1 2011
Cost : 45,000
Life : 5 years
Salvage value : Nil
Depreciation : 45,000 / 5 = 9,000/-
Date of Disposal: June 30. 2014
Depreciation up to June 30, 2014 : 9,000 * 6/12 = 4,500
2014 depreciation : 4,500 /-
WDV of assets on date of sale: 45,000 - 31,500 = 13,500
sales price : 14,000. Gain on sale (14,000 - 13,500) = 500/-
3. Date of purchase : January 1 2010
Cost : 33,000
Life : 6 years
Salvage value : 3,000
Depreciation : 30,000 / 6 = 5,000/-
Date of Disposal: December 31, 2014
Depreciation in 2014 = 5,000
2014 depreciation : 5,000 /-
WDV of assets on date of sale: 33,000 - 25,000 = 8,000
Assets dicarded : Loss to be recognised 8,000/-
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