6. A plant asset is acquired by a business on January 1, 2016, for $100,000. The...

6. A plant asset is acquired by a business on January 1, 2016, for $100,000. The asset's estimated residual value is $10,000 and its estimated life is 5 years. Management chooses to use straight-line depreciation.

On January 1, 2018, management revises the total useful life to 8 years and the residual value to $5,000.

Required:

Compute the balance in Accumulated Depreciation on January 1, 2018.

Compute the Depreciation Expense for the year ending December 31, 2018.

Compute the balance in Accumulated Depreciation on December 31, 2018.

Prepare the adjusting journal entry on December 31, 2018 for the year. Omit the explanation.

Expert Solution

Cost in whole in 2016	a	100,000
Salvage value	b	10,000
Depreciable value	c = a-b	90,000
Depreciation per year	d = c/5	18,000
Depreciation for 2 full years	e = d*2	36,000
Book value at the end of 2 years	f = a-e	64,000	Accumulated Depreciation on January 1, 2018.
New useful life	g	8
Revised salvage value	h	5,000
New depreciation value	I = f-h	59,000
New depreciation per year	j = i/6	9,833.33	Depreciation Expense for the year ending December 31, 2018
Balance in accumulated depreciation on 2018 December	k = f+j	73,833.33	balance in Accumulated Depreciation on December 31, 2018

Adjusting entry

Debit depreciation expenses	9,833
Credit Accum. Dep - Equipments		9,833

You can reach me over comment box if you have any doubts. Please rate this answer

ekkarill92 answered 2 years ago

14. The Anderson Company acquired 100,000 shares of the Beck Company on January 1, 2016, at...

14. The Anderson Company acquired 100,000 shares of the Beck Company on January 1, 2016, at $25 per share. Beck’s stock price on December 31, 2016, was $35 per share. During 2016, Beck declared and paid dividends of $1.50 per share and had earnings of $2.50 per share. Anderson Company accounted for its investment in Beck Company shares as subsequently measured at fair value through OCI. What was the net effect of investment in Beck Company shares on Anderson’s income...

On January 1, five years ago, a business acquired an asset with a 35 year estimated...

On January 1, five years ago, a business acquired an asset with a 35 year estimated useful life. On January 1 of this year, a review of estimated useful life determined that the estimated life should be 45 more years. as a result of the review, and in compliance with GAAP, A- The original cost should be amortized over the next 45 years B- the unamortized cost should be amortized over the next 40 years C- the unamortized cost should...

Monty Company acquired a plant asset at the beginning of Year 1. The asset has an...

Monty Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. An employee has prepared depreciation schedules for this asset using three different methods to compare the results of using one method with the results of using other methods. You are to assume that the following schedules have been correctly prepared for this asset using (1) the straight-line method, (2) the sum-of-the-years'-digits method, and (3) the double-declining-balance method. Year...

Windsor Company acquired a plant asset at the beginning of Year 1. The asset has an...

Windsor Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. An employee has prepared depreciation schedules for this asset using three different methods to compare the results of using one method with the results of using other methods. You are to assume that the following schedules have been correctly prepared for this asset using (1) the straight-line method, (2) the sum-of-the-years'-digits method, and (3) the double-declining-balance method. Year...

Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $422,300, has an...

Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $422,300, has an estimated useful life of 9 years and an estimated residual value of $55,100. a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation? Year Depreciation Expense Year 1 $ Year 2 $ Year 3 $ b. What was the book value of the equipment on January 1 of Year 4? $ c. Assuming that the equipment...

Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $353,300 has an...

Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $353,300 has an estimated useful life of 8 years and an estimated residual value of $46,100. a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation? Year Depreciation Expense Year 1 $ Year 2 $ Year 3 $ b. What was the book value of the equipment on January 1 of Year 4? $ c. Assuming that the equipment...

Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $234,600, has an...

Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $234,600, has an estimated useful life of 10 years and an estimated residual value of $30,600. a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation? Year Depreciation Expense Year 1 $ Year 2 $ Year 3 $ b. What was the book value of the equipment on January 1 of Year 4? $ c. Assuming that the equipment...

Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $236,000 has an...

Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $236,000 has an estimated useful life of 9 years and an estimated residual value of $30,800. a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation? YearDepreciation Expense Year 1$ Year 2$ Year 3$ b. What was the book value of the equipment on January 1 of Year 4? $ c. Assuming that the equipment was sold on January...

On January 1, 2016, Alpha acquired 80 percent of Delta. Of Delta's total business fair value,...

On January 1, 2016, Alpha acquired 80 percent of Delta. Of Delta's total business fair value, $224,000 was allocated to copyrights with a 20-year remaining life. Subsequently, on January 1, 2017, Delta obtained 70 percent of Omega's outstanding voting shares. In this second acquisition, $148,200 of Omega's total business fair value was assigned to copyrights that had a remaining life of 12 years. Delta's book value was $585,000 on January 1, 2016 and Omega reported a book value of $181,500...

A plant asset acquired on October 1, 2022 at a cost of $800,000 has an estimated...

A plant asset acquired on October 1, 2022 at a cost of $800,000 has an estimated useful life of 10 years. The salvage value is estimated to be $50,000 at the end of the asset's useful life. Instructions Determine the depreciation expense for the first two years using the: (a) straight-line method. (b) double-declining-balance method.

Question