In: Accounting
Highsmith Rental Company purchased an apartment building early
in 2021. There are 20 apartments in the building and each is
furnished with major kitchen appliances. The company has decided to
use the group depreciation method for the appliances. The following
data are available:
Appliance | Cost | Residual Value | Service Life (in Years) |
||||
Stoves | $ | 45,000 | $ | 3,000 | 6 | ||
Refrigerators | 40,000 | 7,000 | 5 | ||||
Dishwashers | 38,000 | 6,000 | 4 | ||||
In 2024, four new refrigerators costing $4,200 were purchased for
cash. In that same year, the old refrigerators, which originally
cost $4,500, were sold for $1,700.
Required:
1. Calculate the group depreciation rate, group
life, and depreciation for 2021.
2. Prepare the journal entries to record the
purchase of the new refrigerators and the sale of the old
refrigerators.
Calculate the group depreciation rate, group life, and depreciation for 2021. (Round "Group depreciation rate" and "Group life" answers to 2 decimal places.)
|
2. prepare journal entry
year of purchase 2021 | Rs in $ | |||||
Appliance | cost | residual value | depreciable value | service life | depreciation for 2021 (SLM Basis) | Rate of depreciation |
stoves | 45,000.00 | 3,000.00 | 42,000.00 | 6 | 7000 | 17% |
refrigetors | 40,000.00 | 7,000.00 | 33,000.00 | 5 | 6600 | 20% |
dish washers | 38,000.00 | 6,000.00 | 32,000.00 | 4 | 8000 | 25% |
1,23,000.00 | 16,000.00 | 1,07,000.00 | 21600 | 20% | ||
Group depreciation rate | 20% | |||||
Group life years | 4.95 | |||||
Depreciation for 2021 | 21,600.00 |