UI UIU. l ullls ll l Other Accounts column, also indicate the account titles. It
ID: 2537754 • Letter: U
Question
UI UIU. l ullls ll l Other Accounts column, also indicate the account titles. Item 1 Buildings Other Accounts 2 P9-2B At December 31, 2013, Tong Corporation reported these plant assets. Journ transa 5 00.00 Land Buildings Less: Accumulated depreciation-buildings Equipment Less: Accumulated depreciation--equipment Total plant assets $28,800,000 11,520,000 48,000,000 retire 17,280,000 depr 5,000,000-43,000,000 43,000,000 (LO During 2014, the following selected cash transactions occurred. April 1 Purchased land for $2.600.000 May 1 Sold equipment that cost $750,000 when purchased on January 1, 2009. The equipment was sold for $367,000. Sold land purchased on June 1, 2002, for $2,000,000. The land cost $800,000. Purchased equipment for $840,000. Retired equipment that cost $470,000 when purchased on December 31, 2004. No salvage value was received. June 1 Sept. 1 Dec. 31Explanation / Answer
Problem 9-2B is incomplete.
Solution for P9-7B
Machine 1:
Date of acquisition = July 1, 2012
Cost = $68,000
Salvage Value = $5,000
Useful life = 7 years
Depreciation per year under straight line method = {(Cost-Salvage Value/Useful life)}
= (68,000 – 5,000)/7 = $9,000 Per year
Depreciation in year 2012 for 6 months i.e. (July – December ’12) = 9,000*6/12
$4,500
Depreciation in year 2013
$9,000
Depreciation in year 2014
$9,000
Depreciation in year 2015
$9,000
Total Accumulated Depreciation
$31,500
Machine 2:
Date of Acquisition = Apr 1, 2013
Useful life = 4 years
Rate of depreciation under straight line method = (1/4) *100= 25%
Rate of depreciation under double declining method = 25*2 = 50%
Original Value at the beginning of the year
(A)
Calculation of depreciation
Depreciation
(B)
Value at the end of the year
{A-B}
In year 2013 for 9 months i.e. (Apr -Dec)
64,000
64,000*50%*9/12
24,000
40,000
In Year 2014
40,000
40,000*50%
20,000
20,000
In year 2015
20,000
20,000*50%
10,000
10,000
Total Accumulated Depreciation
54,000
Machine 3:
Depreciation under units of activity = Number of hours used in a year * depreciation rate per hour
Depreciation rate per hour = (Cost – Salvage Value)/Estimated machine hours
(84,000 -4,000)/40,000 = $2 per hour
Year
Actual hours used in a year (A)
Depreciation per hour (B)
Depreciation in a year (A*B)
2013
1,200
2
2,400
2014
6,400
2
12,800
2015
7,000
2
14,000
Total Accumulated Depreciation
29,200
Depreciation in year 2012 for 6 months i.e. (July – December ’12) = 9,000*6/12
$4,500
Depreciation in year 2013
$9,000
Depreciation in year 2014
$9,000
Depreciation in year 2015
$9,000
Total Accumulated Depreciation
$31,500
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