Question

In: Accounting

7.   New Heights Aviation purchased on January 1, 2020 a plane for $ 500,000. The plane...

7.   New Heights Aviation purchased on January 1, 2020 a plane for $ 500,000. The plane is expected to  

      have a 20 year life after which it can be sold for $ 100,000.

Required:

  1. Compute depreciation expense for first three years using straight line.
  2. Compute depreciation expense for the first three years using double-diminishing balance method.
  3. At the end of three years the plane is sold for $400,000. Prepare journal entry to record the sale assuming depreciation was recorded using straight line.

Solutions

Expert Solution

Thank You

Please Rate ,if u have any doubts please comment

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Tony and Suzie purchased land costing $500,000 for a new camp in January 2020. Now they...
Tony and Suzie purchased land costing $500,000 for a new camp in January 2020. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow another million dollars, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to...
Tony and Suzie purchased land costing $500,000 for a new camp in January 2020. Now they...
Tony and Suzie purchased land costing $500,000 for a new camp in January 2020. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow another million dollars, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to...
Trainex Corporation purchased equipment on January 1, 2020 at a cost of $500,000. The equipment has...
Trainex Corporation purchased equipment on January 1, 2020 at a cost of $500,000. The equipment has an estimated residual value of $50,000 and an estimated life of 5 years. At the end of two years, Trainex reevaluated the useful life of the equipment. Management extended the total useful life an additional 5 years but estimated that the equipment would have no residual value at the end of this time. If the company uses straight-line depreciation, what amount (in whole dollars)...
Trainor Corporation purchased equipment on January 1, 2020, at a cost of $500,000. The equipment has...
Trainor Corporation purchased equipment on January 1, 2020, at a cost of $500,000. The equipment has an estimated residual value of $50,000 and an estimated life of 5 years. At the end of two years, Trainor revaluated the useful life of the equipment. Management extended the total useful life an additional 5 years but estimated that the equipment would have no residual value at the end of this time. If the company uses straight-line depreciation, what amount would be recorded...
On January 1, 2020, Johnstone Co. purchased 8% bonds having a maturity value of $500,000, for $542,124.
  A. On January 1, 2020, Johnstone Co. purchased 8% bonds having a maturity value of $500,000, for $542,124. The bonds, issued by City Bank, provide the bondholders a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest receivable each December 31. Johnstone’s business model is to hold these bonds until the maturity date to collect contractual cash flows. Required: (Round all amounts to the nearest dollar.) (a) How should this investment be classified...
On January 1, 2020, Concord Corporation purchased a new machine for $4130000. The new machine has...
On January 1, 2020, Concord Corporation purchased a new machine for $4130000. The new machine has an estimated useful life of nine years and the salvage value was estimated to be $143000. Depreciation was computed using the sum-of-the-years'-digits method. What amount should be shown in Concord's balance sheet at December 31, 2021, net of accumulated depreciation, for this machine? $2535200 $3987000 $3332600 $2623800
The Mardova Clinic purchased a new surgical laser for $72,000 on January 1, 2020. The estimated...
The Mardova Clinic purchased a new surgical laser for $72,000 on January 1, 2020. The estimated salvage value is $8,000. The laser has a useful life of four years and the clinic expects to use it 8,000 hours. It was used 2,600 hours in year 1; 2,400 hours in year 2; 2,200 hours in year 3; and 2,000 hours in year 4. Compute the annual depreciation expense, accumulated depreciation, and book value for each of the four years under each...
The Mardova Clinic purchased a new surgical laser for $72,000 on January 1, 2020. The estimated...
The Mardova Clinic purchased a new surgical laser for $72,000 on January 1, 2020. The estimated salvage value is $8,000. The laser has a useful life of four years and the clinic expects to use it 8,000 hours. It was used 2,600 hours in year 1; 2,400 hours in year 2; 2,200 hours in year 3; and 2,000 hours in year 4. Compute the annual depreciation expense, accumulated depreciation, and book value for each of the four years under each...
Ram Corporation purchased a new truck on January 1, 2020 for $50,000.  The truck is expected to...
Ram Corporation purchased a new truck on January 1, 2020 for $50,000.  The truck is expected to last five years with a residual value of $10,000.  Using straight-line depreciation, show the effect on the income statement and balance sheet of this transaction over the next five years. Income statement 2020                 2021                 2022                 2023                 2024 Depreciation expense    $8000               $8000               $8000               $8000               $8000 Balance Sheet 2020                 2021                 2022                 2023                 2024 Equipment                    $                      $                      $                      $                      $ Less: accumulated   Depreciation               (                   )       (                 )       (                 )        (                 )        (                  ) Book value                    $                      $                      $                      $                      $                                                                                                                                                              Part II – Chapter 8                                     Company A                   Company B                   Company C Days sales in receivables            8.3 days                        39.9 days                      60.3 days Days sales in inventory              2.3...
On January 1, 2020, Land’s End Construction purchased a used truck for $52,500. A new motor...
On January 1, 2020, Land’s End Construction purchased a used truck for $52,500. A new motor had to be in- stalled to get the truck in good working order; the costs were $21,000 for the motor and $7,500 for the labour. The truck was also painted for $6,000. It was ready for use by January 4. A 12-month insurance policy costing $5,100 was purchased to cover the vehicle. The driver filled it with $225 of gas before taking it on...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT