Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 8, Problem 47AP
Journalizing long-term asset transactions (Learning Objectives 2, 3, & 5) 20-25 min.
Regal Freightway provides freight service. The company’s balance sheet includes Land, Buildings, and Motor-Carrier Equipment. Regal Freightway uses a separate
| Jan 1 | Traded in motor-carrier equipment with accumulated depreciation of $88,000 (cost of $140,000) for new equipment with a cash cost of $128,000. Regal Freightway received a trade-in allowance ol $63,000 on the old equipment and paid the remainder in cash. |
| Jul 1 | Sold a building that cost $570,000 and had accumulated depreciation of $270,000 through December 31 of the preceding year. Depreciation is computed on a straight-line basis. The building has a 40-year useful life and a residual value of $50,000. Regal Freightway received $110,000 cash and a $280,000 note receivable. |
| Oct 31 | Purchased land and a building for a cash payment of $650,000. An independent appraisal valued the land at $235,950 and the building at $479,050. |
| Dec 31 | Recorded depreciation as follows: New motor-carrier equipment has an expected useful life of 500,000 miles and an estimated residual value of $18,000. Depreciation method is the units-of-production method. During the year, Regal Freightway drove the equipment 200,000 miles. Depreciation on buildings is straight-line. The new building has a 40-year useful life and a residual value equal to $64,700. |
Requirement
1. Record the transactions in Regal Freightway’s journal.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Name and briefly explain four methods of depreciation.
Mwakisha, a contractor, started business on 1 January 2018. Purchases and disposals of machines over the subsequent three years were as follows:
Machine Date of Cost Date of
Purchase Disposal
Shs.
MA 1 1 January 2018 5,000,000
MB 2 1 July 2019 2,500,000 1 June 2020
MC 3 1 October 2020 7,000,000
The machines are depreciated on straight line basis using a rate of…
E9-22 Recording partial-year depreciation and sale of an asset
Learning Objectives 2, 3
Depr. Exp. $3,400
On January 2, 2017, Comfy Clothing Consignments purchased showroom
fixtures for $17,000 cash, expecting the fixtures to remain in service for five
years. Comfy has depreciated the fixtures on a double-declining-balance basis,
with zero residual value. On October 31, 2018, Comfy sold the fixtures for $7,600
cash. Record both depreciation expense for 2018 and sale of the fixtures on
October 31, 2018.
B.
D
E
G
H.
J
K
3. Create the fixed asset supporting schedule for the following purchases:
Two fixed assets are purchased during the year:
Computer server on 5/4/2014 for $2,214.55
Office furniture on 11/17/2014 for $1,234.54
MACRS 150% is going to be the depreciation method used and depreciation adjusting
entries are made at the end of each month.
(check figure: total depreciation expense = 107.63)
What will be the depreciation general journal adjusting entry on 12/31/2014?
Chapter 8 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - What is depreciation, and why is it used in...Ch. 8 - Prob. 5DQCh. 8 - Which depreciation method would be moot...Ch. 8 - Prob. 7DQCh. 8 - Prob. 8DQCh. 8 - Prob. 9DQCh. 8 - Prob. 10DQ
Ch. 8 - Prob. 1SCCh. 8 - Prob. 2SCCh. 8 - How should a capital expenditure for a long-term...Ch. 8 - Which depreciation method usually produces the...Ch. 8 - Prob. 5SCCh. 8 - Prob. 6SCCh. 8 - Prob. 7SCCh. 8 - Prob. 8SCCh. 8 - Prob. 9SCCh. 8 - Prob. 10SCCh. 8 - Prob. 11SCCh. 8 - Prob. 12SCCh. 8 - Prob. 1SECh. 8 - Long-term asset terms (Learning Objective 1) 5-10...Ch. 8 - Prob. 3SECh. 8 - Lump-sum purchase (Learning Objective 2) 5-10 min....Ch. 8 - Errors in accounting for long-term assets...Ch. 8 - Concept of depreciation (Learning Objective 3)...Ch. 8 - Depreciation methods (Learning Objective 3) 10-15...Ch. 8 - Depreciation methods (Learning Objective 3) 10-15...Ch. 8 - Prob. 9SECh. 8 - Prob. 10SECh. 8 - Prob. 11SECh. 8 - Prob. 12SECh. 8 - Prob. 13SECh. 8 - Prob. 14SECh. 8 - Prob. 15SECh. 8 - Other long term assets (Learning Objective 8) 5-10...Ch. 8 - Prob. 17SECh. 8 - Prob. 18AECh. 8 - Prob. 19AECh. 8 - Prob. 20AECh. 8 - Prob. 21AECh. 8 - Depreciation methods (Learning Objective 3) 15-20...Ch. 8 - Prob. 23AECh. 8 - Prob. 24AECh. 8 - Prob. 25AECh. 8 - Prob. 26AECh. 8 - Prob. 27AECh. 8 - Prob. 28AECh. 8 - Prob. 29AECh. 8 - Prob. 30AECh. 8 - Prob. 31AECh. 8 - Prob. 32BECh. 8 - Prob. 33BECh. 8 - Prob. 34BECh. 8 - Prob. 35BECh. 8 - Prob. 36BECh. 8 - Prob. 37BECh. 8 - Prob. 38BECh. 8 - Prob. 39BECh. 8 - Prob. 40BECh. 8 - Prob. 41BECh. 8 - Prob. 42BECh. 8 - Prob. 43BECh. 8 - Prob. 44BECh. 8 - Prob. 45BECh. 8 - Long-term asset costs and partial-year...Ch. 8 - Journalizing long-term asset transactions...Ch. 8 - Prob. 48APCh. 8 - Prob. 49APCh. 8 - Prob. 50APCh. 8 - Prob. 51APCh. 8 - Prob. 52APCh. 8 - Prob. 53BPCh. 8 - Journalizing long-term asset transactions...Ch. 8 - Prob. 55BPCh. 8 - Prob. 56BPCh. 8 - Prob. 57BPCh. 8 - Prob. 58BPCh. 8 - Prob. 59BPCh. 8 - Prob. 1CECh. 8 - Prob. 1CPCh. 8 - Continuing Financial Statement Analysis Problem...Ch. 8 - Prob. 1EIACh. 8 - Prob. 2EIACh. 8 - Financial Analysis Purpose: To help familiarize...Ch. 8 - Prob. 1IACh. 8 - Prob. 1SBACh. 8 - Written Communication A client of yours notified...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- S9-8 Discarding an asset Learning Objective 3 On October 31, 2018, Alternative Landscapes discarded equipment that had a cost of $26,920. Accumulated Depreciation as of December 31, 2017, was $25,000. Assume annual depreciation on the equipment is $1,920. Journalize the partial-year depreciation expense and disposal of the equipment.arrow_forwardDetermining asset cost, preparing depreciation schedules (3 methods), and identifying depreciation results that meet management objectives On January 3, 2018, Speedy Delivery Service purchased a truck at a cost of $67,000. Before placing the truck in service, Speedy spent $3,000 painting it, $1,200 replacing tires, and $3,500 overhauling the engine. The truck should remain in service for five years and have a residual value of $5,100. The truck’s annual mileage is expected to be 20,000 miles in each of the first four years and 12,800 miles in the fifth year—92,800 miles in total. In deciding which depreciation method to use, Alec Rivera, the general manager, requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance). Requirements Prepare a depreciation schedule for each depreciation method, showing asset cost depreciation expense, accumulated depreciation, and asset book value. Speedy prepares financial…arrow_forward. (Learning Objectives 1, 3, 4: Measure and account for the cost of plant assets anddepreciation; analyze and record a plant asset disposal) Blair, Inc., has the following plantasset accounts: Land, Buildings, and Equipment, with a separate accumulated depreciationaccount for each of these except Land. Blair completed the following transactions:Jan 3 Traded in equipment with accumulated depreciation of $63,000 (cost of$130,000) for similar new equipment with a cash cost of $171,000. Receiveda trade-in allowance of $71,000 on the old equipment and paid $100,000in cash.Jun 30 Sold a building that had a cost of $635,000 and had accumulated depreciationof $170,000 through December 31 of the preceding year. Depreciationis computed on a straight-line basis. The building has a 40-year useful lifeand a residual value of $295,000. Blair received $135,000 cash and a$325,750 note receivable.Oct 31 Purchased land and a building for a single price of $340,000 cash. An independent appraisal valued…arrow_forward
- eBook Show Me How Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $72,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $4,500. The equipment was used for 7,600 hours during Year 1, 6,000 hours in Year 2, and 4,400 hours in Year 3. Required: 1. Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2 and Year 3 by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by each method. Round the answer for each year to the nearest whole dollar. Depreciation Expense Year Straight-Line Method Units-of-Activity Method Double-Declining-Balance Method Year 1 $fill in the blank 1 $fill in the blank 2 $fill in the blank 3 Year 2 fill in the blank 4 fill in the blank 5 fill in the blank 6…arrow_forwardDetermining asset cost, preparing depreciation schedules (3 methods), and identifying depreciation results that meet management objectives On January 3, 2018, Rapid Delivery Service purchased a truck at a cost of $100,000. Before placing the truck in service, Rapid spent $3,000 painting it, $600 replacing tires, and $10,400 overhauling the engine. The truck should remain in service for five years and have a residual value of $12,000. The truck’s annual mileage is expected to be 32,000 miles in each of the first four years and 8,000 miles in the fifth year—136,000 miles in total. In deciding which depreciation method to use, Andy Sargeant, the general manager, requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance). Requirements Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value. Rapid prepares financial…arrow_forward(Learning Objectives 3, 4: Measure DDB depreciation; analyze the effect of a saleof a plant asset) On January 2, 2018, Drake Furnishings purchased display shelving for $8,100cash, expecting the shelving to remain in service for five years. Drake depreciated the shelvingon a double-declining-balance basis, with $1,300 estimated residual value. On September 30,2019, the company sold the shelving for $2,400 cash. Record both the depreciation expense onthe shelving for 2019 and its sale in September. Also show how to compute the gain or loss onthe disposal of the shelvingarrow_forward
- E9-20 Computing depreciation-three methods Learning Objective 2 1. Double-declining-balance, 12/31/19, Exp. $8,250 Crispy Fried Chicken bought equipment on January 2, 2018, for $33,000. The equipment was expected to remain in service for four years and to operate for 6,750 hours. At the end of the equipment's useful life, Crispy's estimates that its residual value will be $6,000. The equipment operated for 675 hours the first year, 2,025 hours the second year, 2,700 hours the third year, and 1,350 hours the fourth year. Requirements 1. Prepare a schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciation methods: straight-line, units-of-production, and double-declining-balance. Show your computations. Note: Three depreciation schedules must be prepared. 2. Which method tracks the wear and tear on the equipment most closely?arrow_forwardRecording Asset Acquisition, Depreciation, and Disposal On January 2, 2016, Verdi Company acquired a machine for $75,000. In addition to the purchase price, Verdi spent $2,100 for shipping and installation, and $2,600 to calibrate the machine prior to use. The company estimates that the machine has a useful life of 5 years and a residual value of $11,000. Required a. Prepare journal entries to record the acquisition costs. Description Debit + → b. Calculate the annual depreciation expense using straight-line depreciation and prepare a journal entry to record depreciation expense for 2016. Description Credit Cash ◆ ◆ Accumulated depreciation c. On December 31, 2019, Verdi sold the machine to another company for $14,000. Prepare the necessary journal entry to record the sale. Credit Description Debit Credit Debit ◆ ♦arrow_forwardDetails of courier vehicles owned by Speedy Couriers at 1 July 2018 are as follows: This business is registered for GST. Cost Accumulated depreciation Useful life Residual value Depreciation method Courier van 80,000 42,000 8 years 10,000 Straight-line Van 60,000 18,000 6 years 6,000 Straight-line Mini-van 55,000 25,000 10 years 5,000 Straight-line Required: Record the following transactions for Speedy Couriers for the year ending 30 June 2018 in the general journal. Narrations are not required. 1 July 2018: The owners of Speedy Couriers decided to re-value the Van to a fair value of $50,000. 30 December 2018: The courier van was exchanged for a new truck with a cash price of $64,000. A trade-in allowance of $27,000 was received for the courier van. The balance outstanding was paid in cash. 30 June 2019: The mini-van was overhauled at a cost of $25,000 (excluding GST) after which the useful life was estimated to be 6 years. There was no change to the residual value of the vehicle. The…arrow_forward
- CengageNOWv2 | Online teaching and learning resource from Cengage Learning Calculator Sale of Equipment Equipment was acquired at the beginning of the year at a cost of $612,500. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $44,360. a. What was the depreciation for the first year? Round your answer to the nearest cent. b. Using the rounded amount from Part a in your computation, determine the gain(loss) on the sale of the equipment, assuming it was sold at the end of year eight for $102,987. Round your answer to the nearest cent and enter as a positive amount. c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent. Previous Next> Email Instructor Submit Test for Grading All work saved.arrow_forward(Learning Objectives 3, 4: Measure DDB depreciation; analyze the effect of a saleof a plant asset) On January 2, 2018, Ellet Furniture purchased display shelving for $8,900cash, expecting the shelving to remain in service for five years. Ellet depreciated the shelvingon a double-declining-balance basis, with $1,100 estimated residual value. On August 31, 2019,the company sold the shelving for $2,800 cash. Record both the depreciation expense on theshelving for 2019 and its sale in August. Also show how to compute the gain or loss on thedisposal of the shelving.arrow_forward(Learning Objective 3: Determine depreciation amounts by three methods) LimaPizza bought a used Toyota delivery van on January 2, 2018, for $18,600. The van wasexpected to remain in service for four years (57,000 miles). At the end of its useful life, Limamanagement estimated that the van’s residual value would be $1,500. The van traveled 20,500miles the first year, 16,000 miles the second year, 15,400 miles the third year, and 5,100 milesin the fourth year.Requirements1. Prepare a schedule of depreciation expense per year for the van under the three depreciationmethods discussed in this chapter. (For units-of-production and double-declining-balancemethods, round to the nearest two decimal places after each step of the calculation.)2. Which method best tracks the wear and tear on the van?3. Which method would Lima prefer to use for income tax purposes? Explain your reasoningin detail.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Depreciation -MACRS; Author: Ronald Moy, Ph.D., CFA, CFP;https://www.youtube.com/watch?v=jsf7NCnkAmk;License: Standard Youtube License