Question
On January 1, 2006, Powell Company purchased a building and machinery that have the following useful lives, salvage value, and costs.
Building, 25-year estimated useful life, $4,000,000 cost, $400,000 salvage value
Machinery, 10-year estimated useful life, $500,000 cost, no salvage value
Building, 25-year estimated useful life, $4,000,000 cost, $400,000 salvage value
Machinery, 10-year estimated useful life, $500,000 cost, no salvage value
Answers
A fleet of refrigerated delivery trucks is acquired on January 5, 2011, at a cost of $1,200,000 with an estimated useful life of eight years and an estimated salvage value of $100,000. Compute the depreciation expense for the first three years using the double-declining-balance method.
Kathy Company purchased and installed a machine on January 1, 2006 at a total cost of $72,000. Straight-line depreciation was calculated based on the assumption of a five-year life, and no salvage value. The machine was disposed of on July 1, 2009.
Prepare the general journal entry to update depreciation to July 1, 2009.
Prepare the general journal entry to record the disposal of the machine under each of these three independent situations:
The machine was sold for $22,000 cash.
The machine was sold for $15,000 cash.
The machine was totally destroyed in a fire and the insurance company settled the claim for $18,000 cash.
Prepare the general journal entry to update depreciation to July 1, 2009.
Prepare the general journal entry to record the disposal of the machine under each of these three independent situations:
The machine was sold for $22,000 cash.
The machine was sold for $15,000 cash.
The machine was totally destroyed in a fire and the insurance company settled the claim for $18,000 cash.