Post the following journal entry: Depreciation expense must be recorded for the month of December. The...

Post the following journal entry: Depreciation expense must be recorded for the month of December.
The building was purchased with cash on February 1, 2014 for $150,000 with a remaining useful life of 30 years and a salvage value of $6,000.
	The method of depreciation for the building is straight-line.
The equipment was purchased with cash on February 1, 2014 for $60,000 with a remaining useful life of 5 years and a salvage value of $3,000.
	The method of depreciation for the equipment is double-declining balance.
Depreciation has been recorded for the building and equipment for months February through November.

Solutions

Expert Solution

All working forms part of the answer
Workings

---Building

A	Cost	$ 150,000.00
B	Residual Value	$ 6,000.00
C=A - B	Depreciable base	$ 144,000.00
D	Life [in years]	30
E=C/D	Annual SLM depreciation	$ 4,800.00

One month depreciation = 4800 x 1/12 = $ 400

---Equipment

A	Cost	$ 60,000.00
B	Residual Value	$ 3,000.00
C=A - B	Depreciable base	$ 57,000.00
D	Life [in years]	5
E=C/D	Annual SLM depreciation	$ 11,400.00
F=E/C	SLM Rate	20.00%
G=F x 2	DDB Rate	40.00%

1^st year depreciation = 60000 x 40% = $ 24,000

Depreciation expense for December = 24000 x 1/12 = $ 2,000

Answer: Journal Entry

--Depreciation on Building for December

Date	Accounts title	Debit	Credit
31-Dec	Depreciation Expense - Building	$ 400.00
	Accumulated Depreciation - Building		$ 400.00

--Depreciation on Equipment for December

Date	Accounts title	Debit	Credit
31-Dec	Depreciation Expense - Equipment	$ 2,000.00
	Accumulated Depreciation - Equipment		$ 2,000.00

ekkarill92 answered 1 year ago

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