Question

In: Accounting

NH CableSource purchased a depreciable asset on January 1, 2013 at a cost of $500,000. The...

  1. NH CableSource purchased a depreciable asset on January 1, 2013 at a cost of $500,000. The asset is expected to have a salvage value of $75,000 at the end of its five-year useful life. The asset will produce 100000 parts at 25000 year 1, 20,000 year 2, 15,000 year 3, 20,000 year 4, 20,000 in year 5. Show the depreciation entry for year 3 using the straightline method of Depreciation. What is the book value at the end of year 3.

Solutions

Expert Solution

Ans:

Event

General Journal

Debit

Credit

1

Land

$279059

Land Improvements

$83551

Building

$11140

    Cash

$373750

Purchase price=Cash Paid +7% commission + Closing cost of property

=$325000+$325,000*7%+$26000

=$373,750

Working Notes

1.Asset

Fair Value

Percentage of total fiar value

Initial Value % of $373750

Land

250,500

0.746646796

279059

Land Improvements

75,000

0.223546945

83551

Building

10,000

0.029806259

11140

335,500

373750

Hope this helped ! Let me know in case of any queries.

ekkarill92 answered 1 year ago
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