In: Accounting
Assume that Mill Creek Golf ClubMill Creek Golf Club paid $75,000 for equipment with a 15-year life and zero expected residual value. After using the equipment for six years, the company determines that the asset will remain useful for only five more years.
Requirements
1.Record depreciation expense on the equipment for year 7 by the straight-line method.
2. What is accumulated depreciation at the end of year 7
Date |
Accounts title |
Debit |
Credit |
Year 7 end |
Depreciation Expense - Equipment |
$ 9,000.00 |
|
Accumulated Depreciation - Equipment |
$ 9,000.00 |
||
(to record depreciation for 7th year) |
Accumulated Depreciation at the end of
7 years
= $ 30000 (for 6 years) + 9000 (for 7th year)
= $ 39,000
A |
Cost |
$ 75,000.00 |
B |
Residual Value |
$ - |
C=A - B |
Depreciable base |
$ 75,000.00 |
D |
Life [in years] |
15 |
E=C/D |
Annual SLM depreciation |
$ 5,000.00 |
F = E x 6 years |
6 Year's depreciation |
$ 30,000.00 |
G = A- F |
Book Value at the time of revision |
$ 45,000.00 |
H |
New useful Life remaining |
5 |
I = G/H |
Year 7 Depreciation |
$ 9,000.00 |