Question
In: Accounting
On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The...
On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The allocation of the total purchase price of $1,050,000 to the various types of assets along with estimated useful lives and residual values are as follows:
|
Asset |
Cost |
Estimated Residual Value |
Estimated Useful |
|||||||
|
Land |
$ |
125,000 |
N/A |
N/A |
||||||
|
Building |
550,000 |
none |
20 |
|||||||
|
Machinery |
190,000 |
12% of cost |
8 |
|||||||
|
Equipment |
185,000 |
$ |
13,000 |
4 |
||||||
|
Total |
$ |
1,050,000 |
||||||||
On June 29, 2019, machinery included in the March 31, 2018,
purchase that cost $105,000 was sold for $85,000. Herzog uses the
straight-line depreciation method for buildings and machinery and
the sum-of-the-years'-digits method for equipment. Partial-year
depreciation is calculated based on the number of months an asset
is in service.
Required:
1. Compute depreciation expense on the
building, machinery, and equipment for 2018.
2. Prepare the journal entries to record the
depreciation on the machinery sold on June 29, 2019, and the sale
of machinery.
3. Compute depreciation expense on the building,
remaining machinery, and equipment for 2019.
Solutions
Expert Solution
Please find below table useful to compute desired results: -
End Results would be as follows: -
ekkarill92 answered 1 year agoRelated Solutions
On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The...
On March 31, 2018, the Herzog Company purchased a factory
complete with machinery and equipment. The allocation of the total
purchase price of $930,000 to the various types of assets along
with estimated useful lives and residual values are as follows:
Asset
Cost
Estimated Residual Value
Estimated Useful
Life in Years
Land
$
135,000
N/A
N/A
Building
430,000
none
20
Machinery
230,000
12% of cost
10
Equipment
135,000
$
13,000
4
Total
$
930,000
On June 29, 2019, machinery included...
On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The...
On March 31, 2018, the Herzog Company purchased a factory
complete with machinery and equipment. The allocation of the total
purchase price of $1,090,000 to the various types of assets along
with estimated useful lives and residual values are as follows:
Asset
Cost
Estimated Residual Value
Estimated Useful
Life in Years
Land
$
145,000
N/A
N/A
Building
590,000
none
20
Machinery
150,000
12% of cost
8
Equipment
205,000
$
16,000
6
Total
$
1,090,000
On June 29, 2019, machinery included...
On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The...
On March 31, 2018, the Herzog Company purchased a factory
complete with machinery and equipment. The allocation of the total
purchase price of $950,000 to the various types of assets along
with estimated useful lives and residual values are as follows:
Asset
Cost
Estimated Residual Value
Estimated Useful
Life in Years
Land
$
125,000
N/A
N/A
Building
450,000
none
20
Machinery
250,000
12% of cost
10
Equipment
125,000
$
13,000
4
Total
$
950,000
On June 29, 2019, machinery included...
On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The...
On March 31, 2018, the Herzog Company purchased a factory
complete with machinery and equipment. The allocation of the total
purchase price of $1,050,000 to the various types of assets along
with estimated useful lives and residual values are as follows:
Asset
Cost
Estimated Residual Value
Estimated Useful
Life in Years
Land
$
125,000
N/A
N/A
Building
550,000
none
20
Machinery
190,000
12% of cost
8
Equipment
185,000
$
13,000
4
Total
$
1,050,000
On June 29, 2019, machinery included...
On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The...
On March 31, 2018, the Herzog Company purchased a factory
complete with machinery and equipment. The allocation of the total
purchase price of $1,040,000 to the various types of assets along
with estimated useful lives and residual values are as follows:
Asset
Cost
Estimated Residual Value
Estimated Useful
Life in Years
Land
$
120,000
N/A
N/A
Building
540,000
none
25
Machinery
200,000
10% of cost
6
Equipment
180,000
$
15,000
5
Total
$
1,040,000
On June 29, 2019, machinery included...
On March 31, 2021, the Herzog Company purchased a factory complete with vehicles and equipment. The...
On March 31, 2021, the Herzog Company purchased a factory
complete with vehicles and equipment. The allocation of the total
purchase price of $1,000,000 to the various types of assets along
with estimated useful lives and residual values are as follows:
Asset
Cost
Estimated Residual
Value
Estimated Useful
Life (in years)
Land
$ 100,000
N/A
N/A
Building
500,000
none
25
Equipment
240,000
10% of cost
8
Vehicles
160,000
$12,000
8
Total
$1,000,000
On June 29, 2022, equipment included in the March...
On March 31, 2021, the Herzog Company purchased a factory complete with vehicles and equipment. The...
On March 31, 2021, the Herzog Company purchased a factory
complete with vehicles and equipment. The allocation of the total
purchase price of $960,000 to the various types of assets along
with estimated useful lives and residual values are as follows:
Asset Cost Estimated Residual Value Estimated Useful Life (in
years) Land $ 120,000 N/A N/A Building 460,000 none 25 Equipment
260,000 10% of cost 6 Vehicles 120,000 $ 15,000 10 Total $ 960,000
On June 29, 2022, equipment included...
On March 31, 2021, the Herzog Company purchased a factory complete with vehicles and equipment. The...
On March 31, 2021, the
Herzog Company purchased a factory complete with vehicles and
equipment. The allocation of the total purchase price of $950,000
to the various types of assets along with estimated useful lives
and residual values are as follows:
Asset
Cost
Estimated Residual Value
Estimated Useful
Life (in years)
Land
$
125,000
N/A
N/A
Building
450,000
none
20
Equipment
250,000
12%
of cost
10
Vehicles
125,000
$
13,000
10
Total
$
950,000
On June 29, 2022, equipment included...
Chapter 11, #2 On March 31, 2021, the Herzog Company purchased a factory complete with vehicles...
Chapter 11, #2
On March 31, 2021, the Herzog Company purchased a factory
complete with vehicles and equipment. The allocation of the total
purchase price of $990,000 to the various types of assets along
with estimated useful lives and residual values are as follows:
Asset
Cost
Estimated Residual Value
Estimated Useful
Life (in years)
Land
$
105,000
N/A
N/A
Building
490,000
none
20
Equipment
290,000
12% of cost
10
Vehicles
105,000
$
13,000
10
Total
$
990,000
On June 29,...
On March 31, 2018, Canseco Plumbing Fixtures purchased equipment for $44,000. Residual value at the end...
On March 31, 2018, Canseco Plumbing Fixtures purchased equipment
for $44,000. Residual value at the end of an estimated four-year
service life is expected to be $8,000. The company expects the
machine to operate for 20,000 hours. a. Calculate depreciation
expense for 2018 and 2019 using straight line method. b. Calculate
depreciation expense for 2018 and 2019 using
sum-of-the-years’-digits method. c. Calculate depreciation expense
for 2018 and 2019 using double-declining balance method.
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