Question

In: Accounting

Solich Sandwich Shop had the following long-term asset balances as of December 31, 2021: cost accumulated...

Solich Sandwich Shop had the following long-term asset balances as of December 31, 2021:

	cost	accumulated depreciation	book value
land	79,000	-	79,000
building	444,000	(159,840)	284,160
equipment	221,600	(46,800)	174,800
patent	170,000	(68,000)	102,000

Solich purchased all the assets at the beginning of 2019 (3 years ago). The building is depreciated over a 10-year service life using the double-declining-balance method and estimating no residual value. The equipment is depreciated over a 9-year useful life using the straight-line method with an estimated residual value of $11,000. The patent is estimated to have a five-year service life with no residual value and is amortized using the straight-line method. Depreciation and amortization have been recorded for 2019 and 2020.

1. For the year ended December 31, 2021, record depreciation expense for buildings and equipment. Land is not depreciated. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Record the depreciation on the building:

Transaction	General Ledger	Debit	Credit
1

Record the depreciation on the equipment

Transaction	General Ledger	Debit	Credit
2

2. For the year ended December 31, 2021, record amortization expense for the patent. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Transaction	General Ledger	Debit	Credit
1

Solutions

Expert Solution

Answer -

1. Answer -

a. Record depreciation on the building:

Calculation:

Double-declining-balance method:

Depreciation expense = 2 * (Book value of assets / Useful life)

= 2 * ($284160 / 10 years)

= $56832

b. Record depreciation on the equipment:

Calculation:

Straight-line method:

Depreciation expense = (Cost of assets - Residual value) / Useful life

= ($221600 - $11000) / 9 years

= $23400

2. Answer -

Record amortization expense for the patent:

Transaction	General Ledger	Debit	Credit
1	Amortization expense	$34,000
	Patent		$34,000
	(To record annual amortization expense)

Calculation:

Straight-line method:

Amortization expense = Cost of assets / Useful life

= $170000 / 5 years

= $34000

ekkarill92 answered 1 year ago

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