Use the following information to answer the next 4 questions: The following are selected transactions affecting Aggie Company's long-term assets during the 2020 fiscal year.Apr 1 Purchased a truck for $36,000. The truck isexpected to last six years and have a $3,000 salvage value. The company uses straight-line depreciation for its trucks. June 1 Sold a computer for $20,000. The computer had been purchased for $95,000 on January 1, 2018.The computer was expected to last for five years with a salvage value of $5,000. The company uses the double-declining method to depreciate their computer equipment.Sept. 1 Sold a piece of machinery that was purchasedon January 1, 2018. The machine cost $60,000 and the company expected the machine to produce 36,000 units. The machine has an estimated salvage value of $6,000. The machine produced 5, 800 units in 2018; 5,500units in 2019; and 3,400 units in 2020. The sale of the machine resulted in a loss of $2,950. Required:7. Determine the book value of the truck as of December 31, 2020:A. $31,500B. $28,875C. $28,500D. $30, 500E. S31,875 8. Determine depreciation expense for 2020 on the computer:A. $5, 400B. S13, 680C. $12,033D. $5,700E. S8, 889 9. The journal entry to recognize the sale of the computer on June 1, 2020 would include a:A.Credit to computer for $28, 500B. Credit to gain on sale of computer for $8,500C. Debit to Accumulated Depreciation for $66, 500D. Debit to loss on sale of computer for $12,000E. Credit to gain on sale of computer for S11,111 10. Determine the amount of cash received as a result of the sale of the machine on September 1, 2020:A. $35,000B. S40, 900C. S21, 550D. S27, 450E. S42,600

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Description: Use the following information to answer the next 4 questions: The following are selected transactions affecting Aggie Company's long-term assets during the 2020 fiscal year.Apr 1 Purchased a truck for $36,000. The truck isexpected to last six years

Accumulated depreciation is a method of accounting for the annual reduction of an asset's value to a…

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units in 2019; and 3,400 units in 2020. The sale of the machine resulted in a loss of $2,950. Required:7. Determine the book value of the truck as of December 31, 2020:A. $31,500B. $28,875C. S28, 500D. $30, 500E. 31.875 8. Determine depreciation expense for 2020 on the computer:A. S5, 400B. $13,680C. S12, 033D. $5,700E. S8, 889 9. The journal entry to recognize the sale of the computer on June 1, 2020 would include a:A. Credit to computer for $28, 500B. Credit to gain on sale of computer for S8, 500C. Debit to Accumulated Depreciation for $66, 500D. Debit to loss on sale of computer for $12,000E. Credit to gain on sale of computer for s 11.111 10. Determine the amount of cash received as a result of the sale of the machine on September 1, 2020:A. $35,000B. S40, 900C. $21, 550D. S27,450E. S42,600

units in 2019; and 3,400 units in 2020. The sale of the machine resulted in a loss of $2,950. Required:7. Determine the book value of the truck as of December 31, 2020:A. $31,500B. $28,875C. S28, 500D. $30, 500E. 31.875 8. Determine depreciation expense for 2020 on the computer:A. S5, 400B. $13,680C. S12, 033D. $5,700E. S8, 889 9. The journal entry to recognize the sale of the computer on June 1, 2020 would include a:A. Credit to computer for $28, 500B. Credit to gain on sale of computer for S8, 500C. Debit to Accumulated Depreciation for $66, 500D. Debit to loss on sale of computer for $12,000E. Credit to gain on sale of computer for s 11.111 10. Determine the amount of cash received as a result of the sale of the machine on September 1, 2020:A. $35,000B. S40, 900C. $21, 550D. S27,450E. S42,600

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 9P: During 2019, Ryel Companys controller asked you to prepare correcting journal entries for the...

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At the beginning of 2020, Holden Companys controller asked you to prepare correcting entries for the following three situations: 1. Machine X was purchased for 100,000 on January 1, 2015. Straight-line depreciation has been recorded for 5 years, and the Accumulated Depreciation account has a balance of 45,000. The estimated residual value remains at 10,000, but the service life is now estimated to be 1 year longer than originally estimated. 2. Machine Y was purchased for 40,000 on January 1, 2018. It had an estimated residual value of 4,000 and an estimated service life of 8 years. It has been depreciated under the sum-of-the-years-digits method for 2 years. Now, the company has decided to change to the straight-line method. 3. Machine Z was purchased for 80,000 on January 1, 2019. Double-declining-balance depreciation has been recorded for 1 year. The estimated residual value is 8,000 and the estimated service life is 5 years. The computation of the depreciation erroneously included the estimated residual value. Required: Prepare any necessary correcting journal entries for each situation. Also prepare the journal entry for each situation to record the depreciation for 2020. Ignore income taxes.
Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for eight years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After three years of recording depreciation, Montezuma determines that the delivery truck will only be useful for another three years and that the salvage value will increase to $4,000. Determine the depreciation expense for the final three years of the assets life, and create the journal entry for year four.
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Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.
Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated life: 5 years Estimated residual value: 3,000 Depreciation method for financial statements: straight-line method Depreciation for income tax purposes: MACRS (3-year life) From 2019 through 2023, each year, Hunter had sales of 100,000, cost of goods sold of 60,000, and operating expenses (excluding depreciation) of 15,000. The truck was disposed of on December 31, 2023, for 2,000. Required: 1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2019 through 2023. 2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2019 through 2023. 3. Compare the total income for all 5 years under Requirements 1 and 2.