The property, plant, and equipment section of the Jasper Company’s December 31,
ID: 2596009 • Letter: T
Question
The property, plant, and equipment section of the Jasper Company’s December 31, 2015, balance sheet contained the following:
The land and building were purchased at the beginning of 2011. Straight-line depreciation is used and a residual value of $32,000 for the building is anticipated.
The straight-line method is used to determine depreciation on the equipment. On March 31, 2016, Machine 102 was sold for $47,500. Early in 2016, the useful life of machine 101 was revised to seven years in total, and the residual value was revised to zero.
Calculate the accumulated depreciation on the equipment at December 31, 2015.
2. Prepare the 2016 year-end adjusting journal entries to record depreciation on the building and equipment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
The property, plant, and equipment section of the Jasper Company’s December 31, 2015, balance sheet contained the following:
Explanation / Answer
Solution:
Cost of Building = $672,000
Accumulated depreciation up to 2015 = $160000
Building was purchased in 2011 beginning it means annual depreciation on building = 160000/4 = $40,000
Equipment Cost & Accumulated depreciation:
Adjustment Entries in 2016:
Sale of Machine 102 on 31.03.2016:
Bank A/c Dr $47,500
Depreciation A/c Dr $2050
Accumulated Depreciation Dr $12,300
Loss on Sale of Equipment Dr $10,950
To Equipment Cr $72800
Depreciation on Building on 31.12.2016:
Depreciation A/c Dr $40,000
To Accumulated Depreciation Cr $40,000
Depreciation on Equipment on 31.12.2016:
Machine 101 revise life = 7 years, Remaining life = 7-3 = 4 years, Residual Value = 0
Therefore annual depreciation for next 4 years = (61,200 – 16,500)/4 = $11,175
Annual Depreciation on Machine 103 = $2,400
Depreciation A/c Dr $13,575
To Accumulated Depreciation Cr $13,575
Machine Acquisiton Cost Date of Purchase Residual Value Life Annual Depreciation Years up to 31st December 2015 Accumulated Depreciation 101 $61,200.00 1-Jan-13 $6,200.00 10 $5,500.00 3 $16,500.00 102 $72,800.00 30-Jun-14 $7,200.00 8 $8,200.00 1.5 $12,300.00 103 $23,800.00 1-Sep-15 $2,200.00 9 $2,400.00 0.33 $800.00 Total $29,600.00Related Questions
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