On July 1, 2016, Alpha Company purchased for $76,000, equipment having a service life of eight...

On July 1, 2016, Alpha Company purchased for $76,000, equipment having a service life of eight years and an estimated residual value of $14,000. Alpha has recorded depreciation of the equipment using the straight line method. On December 31, 2018, before making any annual adjusting entries, the equipment was exchanged for new machinery having a fair value of $35,000. The transaction has commercial substance. Use this information to prepare all General Journal entries (without explanation) required to record the events for December 31, 2018.

Expert Solution

Date	Accounts title	Debit	Credit
31-Dec-18	Depreciation expense - Equipment	$7,750
	Accumulated Depreciation - Equipment		$7,750
	(to update 2018's depreciation)

31-Dec-18	Equipment (new machine)	$35,000
	Accumulated Depreciation - Equipment	$19,375
	Loss on exchange	$21,625
	Equipment (old)		$76,000
	(to record the exchange)

Working

A	Cost [1 jul 2016]	$76,000
B	Estimated residual value	$14,000
C = A - B	Depreciable base	$62,000
D	Useful life	8
E = C/D	Annual 12 month depreciation	$7,750
	2016's depreciation [recorded] 7750 x 6/12	$3,875
	2017's depreciation [recorded]	$7,750
	2018's depreciation [not yet recorded]	$7,750
F	Total Accumulated Depreciation	$19,375
G = A - F	Book Value of Equipment	$56,625
H	Fair Value of machine	$35,000
I = G - H	Loss on Exchange	$21,625

ekkarill92 answered 2 years ago

On July 1, 2016, Alpha Company purchased for $72,000, equipment having a service life of eight...

On July 1, 2016, Alpha Company purchased for $72,000, equipment having a service life of eight years and an estimated residual value of $6,000. Alpha has recorded depreciation of the equipment using the double-declining balance method. On December 31, 2018, before making any annual adjusting entries, the equipment was exchanged for new machinery having a fair value of $32,500. The transaction has commercial substance. Use this information to prepare all General Journal entries (without explanation) required to record the events...

On July 1, 2016, Johnny Company purchased equipment for $550,000. The estimated useful life of the...

On July 1, 2016, Johnny Company purchased equipment for $550,000. The estimated useful life of the equipment is 10-years. It is predicted that the equipment can be sold at the end of the 10-year period for $90,000. Johnny uses the double-declining balance depreciation method. Johnny recorded depreciation normally during 2016, 2017, and 2018. However, because Johnny determined that the equipment was no longer useful to the company, Johnny sold the equipment on June 30, 2019 for $400,000. 1. Based on...

On July 1, 2020, Yorkton Company purchased for $420,000 equipment having an estimated useful life of...

On July 1, 2020, Yorkton Company purchased for $420,000 equipment having an estimated useful life of five years with an estimated residual value of $20,000. Depreciation is calculated to the nearest month. The company has a December 31 year-end. Required: Complete the following schedules: (Amount to be deducted should be indicated by a minus sign.)

On July 1, 2017, Sparks Company purchased for $4,300,000 an equipment having an estimated useful life...

On July 1, 2017, Sparks Company purchased for $4,300,000 an equipment having an estimated useful life of 5 years with an estimated residual value of $200,000. Depreciation is taken for the portion of the year the asset is used. Instructions (a) Complete the form below by determining the depreciation expense and year-end book values for 2017and 2018 using the 1. sum-of-the-years'-digits method. 2. double-declining balance method. Sum-of-the-Years'-Digits Method 2017 2018 Equipment $4,300,000 $4,300,000 Less: Accumulated Depreciation ...

On January 1, 2017, Frostburg Company purchased for $68,500, equipment having a service life of six...

On January 1, 2017, Frostburg Company purchased for $68,500, equipment having a service life of six years and an estimated residual value of $4,000. Frostburg has recorded depreciation of the equipment using the straight-line method. On December 31, 2019, before making any annual adjusting entries, the equipment was exchanged for new machinery having a fair value of $35,000. The transaction has commercial substance. Use this information to prepare all General Journal entries (without explanation) required to record the events for...

6.On January 1, 2017, Frostburg Company purchased for $68,500, equipment having a service life of six...

6.On January 1, 2017, Frostburg Company purchased for $68,500, equipment having a service life of six years and an estimated residual value of $4,000. Frostburg has recorded depreciation of the equipment using the straight-line method. On December 31, 2019, before making any annual adjusting entries, the equipment was exchanged for new machinery having a fair value of $35,000. The transaction has commercial substance. Use this information to prepare all General Journal entries (without explanation) required to record the events for...

On July 1, 2020, Concord Company purchased for $7,200,000 snow-making equipment having an estimated useful life...

On July 1, 2020, Concord Company purchased for $7,200,000 snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of $300,000. Depreciation is taken for the portion of the year the asset is used. Complete the form below by determining the depreciation expense and year-end book values for 2020 and 2021 using the 1. sum-of-the-years'-digits method. 2. double-declining balance method. 2020 2021 Sum-of-the-Years'-Digits Method Equipment $7,200,000 $7,200,000 Less: Accumulated Depreciation $ $ Year-End Book Value...

On July 1, 2020, Flounder Company purchased for $4,140,000 snow-making equipment having an estimated useful life...

On July 1, 2020, Flounder Company purchased for $4,140,000 snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of $172,500. Depreciation is taken for the portion of the year the asset is used. (a) Complete the form below by determining the depreciation expense and year-end book values for 2020 and 2021 using the 1. sum-of-the-years'-digits method. 2. double-declining balance method. 2020 2021 Sum-of-the-Years'-Digits Method Equipment $4,140,000 $4,140,000 Less: Accumulated Depreciation $ $ Year-End Book...

On July 1, 2020, Ayayai Company purchased for $2,880,000 snow-making equipment having an estimated useful life...

On July 1, 2020, Ayayai Company purchased for $2,880,000 snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of $120,000. Depreciation is taken for the portion of the year the asset is used. Complete the form below by determining the depreciation expense and year-end book values for 2020 and 2021 using the 1. sum-of-the-years'-digits method. 2. double-declining balance method. 2020 2021 Sum-of-the-Years'-Digits Method Equipment $2,880,000 $2,880,000 Less: Accumulated Depreciation $ $ Year-End Book Value...

On July 1, 2017, Sport Company purchased for $3,600,000 snow-making equipment having an estimated useful life...

On July 1, 2017, Sport Company purchased for $3,600,000 snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of $150,000. Depreciation is taken for the portion of the year the asset is used. During 2019, the company determined that the equipment would be useful to the company for only one more year beyond 2019. Salvage value is estimated at $200,000. What is the depreciation base of this asset? Please help me understand how to...

Question