Exercise 22-14 Gerald Englehart Industries changed from the double-declining-bal
ID: 2510370 • Letter: E
Question
Exercise 22-14 Gerald Englehart Industries changed from the double-declining-balance to the straight-line method in 2018 on all its equipment. There was no change in the assets' salvage values or useful lives. Plant assets, acquired on January 2, 2015, had an original cost of $1,600,000, with a $100,000 salvage value and an 8-year estimated useful life. Income before depreciation expense was $270,000 in 2017 and $300,000 in 2018. Prepare the journal entry to record depreciation expense in 2018. (Credit account tities are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Starting with income before depreciation expense, prepare the remaining portion of the income statement for 2017 and 2018. 2018 2017 Income before depreciation expense s Depreciation expense Net income Question Attempts: UnlimitedExplanation / Answer
Dr. Depreciation expense 135000
Cr. Accumulated depreciation 135000
Under the double declining method the asset was being depreciated at 25%( ( 100/8)*2). At the beginning of 2018 the asset’s carrying value was 675000 which shall be depreciated over the remaining period of 5 years thus a depreciation expense of 135000 ( 675000/5) is recognized in 2018
Depreciation expense for 2017 is 225000 (( 1600000- 400000- 300000)*25%)
Net income for 2017 is 45000 and for 2018 is 165000 (300000-135000)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.