FUND.ACCT.PRIN -ONLINE ONLY  >I<
FUND.ACCT.PRIN -ONLINE ONLY >I<
22nd Edition
ISBN: 9780077632878
Author: Wild
Publisher: MCG
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Chapter 10, Problem 4APSA
To determine

Introduction:

Asset is a term used to define a resource owned by a company against which some income will earn in near future and that income will expressed in monetary terms. Recording of an asset is done via journal entry and represented in Balance sheet as an Asset.

Depreciation is a term used to indicate reduction in value of assets occurred due to frequent use, wear and tear, changes in technology etc. it is recorded in statement of accounts as expenditure however there is no outflow of cash.

Straight line method is a method to be used for computing depreciation using Formula under which cost of asset is depreciated equally over the useful life of asset.

To determine:

Journalize the entries of the events occurred

Expert Solution & Answer
Check Mark

Answer to Problem 4APSA

Solution:

Journal entry will be recorded as under:

In the books of Champion Contractors

     
     
     
    $
    $
    01.01.2014
    Equipment A/c
    Dr.
    300600
     
     
    To Cash A/c
    Cr.
     
    300600
     
    (Being asset recorded)
     
     
     
     
     
     
     
     
    03.01.2014
    Equipment A/c
    Dr.
    4800
     
     
    To Cash A/c
    Cr.
     
    4800
     
    (Being asset recorded)
     
     
     
     
     
     
     
     
    31.12.2014
    Depreciation A/c
    Dr.
    70850
     
     
    To Accumulated Depreciation A/c
    Cr.
     
    70850
     
    (Being Depreciation on Asset recorded)
     
     
     
     
     
     
     
     
    01.01.2015
    Equipment A/c
    Dr.
    5400
     
     
    To Cash A/c
    Cr.
     
    5400
     
    (Being asset recorded)
     
     
     
     
     
     
     
     
    17.02.2015
    Repair & Maintenance A/c
    Dr.
    820
     
     
    To Cash A/c
    Cr.
     
    820
     
    (Being repair expenses on asset recorded)
     
     
     
     
     
     
     
     
    31.12.2015
    Depreciation A/c
    Dr.
    43590
     
     
    To Accumulated Depreciation A/c
    Cr.
     
    43590
     
    (Being Depreciation on Asset recorded)
     
     
     

Explanation of Solution


Explanation:

Year 2014

Given:

Cost of Asset for the year 2014 is $ 305400,
Residual value is $ 22000 (i.e. 20600+1400),
Useful life of Copy machine is 4 Years

Formula used:

For computation of cost of Equipment

    Cost of Machine
    $
    Original value of asset at the beginning of year
    xxxx
    Add: Expenditure capitalized during the year
    xxxx
    Less: Depreciation for the year
    xxxx
    Asset value at the end of year xxxx

For calculating Depreciation under straight line method

Cost of Asset- Residual Value
Useful life of Asset

Calculation:

*Computation of Cost of Equipment

    Cost of Equipment$
    Cash
    287600
    Sales tax
    11500
    Transportation
    1500
    A.C. installation
    4800
    Total305400

$ 305400- $ 22000
    4
$ 283400/4
$ 70850

Year 2015

Given:

Cost of Asset for the year 2015 is $ 305400,
Residual value is $ 22000 (i.e. 20600+1400),
Useful life of Copy machine is remaining 3 Years which further increased by 2 Years so, 5years

Formula used:

For computation of cost of Equipment

    Cost of Machine
    $
    Original value of asset at the beginning of year
    xxxx
    Add: Expenditure capitalized during the year
    xxxx
    Less: Depreciation for the year
    xxxx
    Asset value at the end of year xxxx

For calculating Depreciation under straight line method

Cost of Asset- Residual Value
Useful life of Asset

Calculation:

Cost of Equipment is computed as follows:

    Cost of Equipment$
    Asset value in the year 2014
    305400
    Less: Depreciation for the year 2014
    70850
    Asset value at the beginning of year 2015
    234550
    Add: to overhaul loader’s engine*
    5400
    Cost at the end of year 2015239950

*Add in the cost of asset because it increases the useful life of assets

$ 239950- $ 22000
    5
$ 217950/5
$ 43590

Conclusion:

Events and transaction are recorded in the form of journal entries as and when it occurred.

Conclusion

Events and transaction are recorded in the form of journal entries as and when it occurred.

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Chapter 10 Solutions

FUND.ACCT.PRIN -ONLINE ONLY >I<

Ch. 10 - Prob. 11DQCh. 10 - Prob. 12DQCh. 10 - Prob. 13DQCh. 10 - Prob. 14DQCh. 10 - Prob. 15DQCh. 10 - Prob. 16DQCh. 10 - Prob. 17DQCh. 10 - Prob. 18DQCh. 10 - Prob. 19DQCh. 10 - Prob. 20DQCh. 10 - Prob. 21DQCh. 10 - Prob. 1QSCh. 10 - Prob. 2QSCh. 10 - On January 2,2015. the Matthews Band acquires...Ch. 10 - Units-of-production On January 2,2015. the...Ch. 10 - Prob. 5QSCh. 10 - Prob. 6QSCh. 10 - Prob. 7QSCh. 10 - Prob. 8QSCh. 10 - Prob. 9QSCh. 10 - Prob. 10QSCh. 10 - Prob. 11QSCh. 10 - Prob. 12QSCh. 10 - Prob. 13QSCh. 10 - Prob. 14QSCh. 10 - Prob. 15QSCh. 10 - Prob. 1ECh. 10 - Prob. 2ECh. 10 - Prob. 3ECh. 10 - Prob. 4ECh. 10 - Exercise 10-5 Units-of-production depreciation P1...Ch. 10 - Exercise 10-6 Double-declining-balance...Ch. 10 - Prob. 7ECh. 10 - Exercise 10-8 Double-declining-balance...Ch. 10 - Prob. 9ECh. 10 - Exercise 10-10 Double-declining-balance...Ch. 10 - Prob. 11ECh. 10 - Prob. 12ECh. 10 - Prob. 13ECh. 10 - Prob. 14ECh. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Prob. 17ECh. 10 - Prob. 18ECh. 10 - Prob. 19ECh. 10 - Prob. 20ECh. 10 - Prob. 21ECh. 10 - Prob. 22ECh. 10 - Prob. 23ECh. 10 - Prob. 24ECh. 10 - Prob. 25ECh. 10 - Prob. 1APSACh. 10 - Problem 1O-2A Depreciation methods P1 A machine...Ch. 10 - Prob. 3APSACh. 10 - Prob. 4APSACh. 10 - Prob. 5APSACh. 10 - Prob. 6APSACh. 10 - Problem 1O7A Natural resources P3 On July 23 of...Ch. 10 - Prob. 8APSACh. 10 - Prob. 1BPSBCh. 10 - Problem 10-28 Depreciation methods P1 On January...Ch. 10 - Prob. 3BPSBCh. 10 - Prob. 4BPSBCh. 10 - Prob. 5BPSBCh. 10 - Problem 1O-6B Disposal of plant assets C1 P1 P2 On...Ch. 10 - Problem 10-78 Natural resources P3 On February 19...Ch. 10 - Prob. 8BPSBCh. 10 - Prob. 10SPCh. 10 - Refer to the financial statements of Apple in...Ch. 10 - Prob. 2BTNCh. 10 - Prob. 3BTNCh. 10 - Prob. 4BTNCh. 10 - Prob. 5BTNCh. 10 - Each ream member is to become an expert on one...Ch. 10 - Prob. 7BTNCh. 10 - Prob. 8BTNCh. 10 - Prob. 9BTN
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Accounting for Derivatives_1.mp4; Author: DVRamanaXIMB;https://www.youtube.com/watch?v=kZky1jIiCN0;License: Standard Youtube License
Depreciation|(Concept and Methods); Author: easyCBSE commerce lectures;https://www.youtube.com/watch?v=w4lScJke6CA;License: Standard YouTube License, CC-BY