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In: Accounting

Depreciation must be recorded for the year given the following information: Assets Acquisition Date Cost Estimated...

Depreciation must be recorded for the year given the following information:

Assets Acquisition Date Cost Estimated Life Salvage Depreciation Method

Building 7/1/08 $306,000 25 years $20,000 straight-line

Star ship #1 4/1/09 $28,000 60,000 parsecs $3,100 units of production (parsecs) (7,000 parsecs this yr.)

Star ship #2 9/1/11 $33,000 60,000 parsecs $4,200 units of production (parsecs) (6,000 parsecs this yr.)

Star Destroyer #2 3/29/09 $40,000 10 years $5,000 straight-line

Star Destroyer #3 9/16/10 $43,000 10 years $5,500 straight-line

Office Equipment 11/15/09 $32,800 7 years $0 straight-line

Supercomputer 12/21/14 $18,000 4 years $300 Double Declining Balance

(note: the company takes 1/2 year's depreciation in the year of acquisition)

Round to the nearest dollar for total depreciation.

Depreciation Expense: Debit #
Accumulated Depreciation Building: Credit #
Accumulated Depreciation Equipment: Credit #
Accumulated Depreciation Spaceships: Credit #

Expert Solution

All working forms part of the answer
Depreciation working

Straight Line Method assets

	Cost (A)	Salvage value (B)	Depreciable base (C=A - B)	Life (in years) / Units of production	Annual SLm Depreciation
Building	$ 3,06,000.00	$ 20,000.00	$ 2,86,000.00	25	$ 11,440.00
Star Destroyer #2	$ 40,000.00	$ 5,000.00	$ 35,000.00	10	$ 3,500.00
Star Destroyer #3	$ 43,000.00	$ 5,500.00	$ 37,500.00	10	$ 3,750.00
Office Equipment	$ 32,800.00	$ -	$ 32,800.00	7	$ 4,685.71

Units of production method

	Cost (A)	Salvage value (B)	Depreciable base (C=A - B)	Units of Production total expected	Depreciation per parsecs	No. of parsecs	Annual Depreciation
StarShip #1	$ 28,000.00	$ 3,100.00	$ 24,900.00	60000	$ 0.42	7000	$ 2,905.00
StarShip #2	$ 33,000.00	$ 4,200.00	$ 28,800.00	60000	$ 0.48	6000	$ 2,880.00

Double Declining Method Asset

A	Cost of SuperComputer	$ 18,000.00
B	Residual Value	$ 300.00
C=A - B	Depreciable base	$ 17,700.00
D	Life [in years]	4
E=C/D	Annual SLM depreciation	$ 4,425.00
F=E/C	SLM Rate	25.00%
G=F x 2	DDB Rate	50.00%

Year	Beginning Book Value	Depreciation rate	Depreciation expense
1	$ 18,000.00	50.00%	9000

Calculation of depreciation expense

	Depreciation expense
Building:	$ 11,440.00
TOTAL (A)	$ 11,440.00
Equipments:
Supercomputer	$ 4,500.00 [$9000 x 50%]
Office Equipment	$ 4,685.71
TOTAL (B)	$ 9,185.71
Spaceships:
StarShip #1	$ 2,905.00
StarShip #2	$ 2,880.00
Star Destroyer #2	$ 3,500.00
Star Destroyer #3	$ 3,750.00
TOTAL (C )	$ 13,035.00

Total Depreciation expense	$ 33,660.71

Journal Entry

Accounts Titles	Debit	Credit
Depreciation expense	$ 33,660.71
Accumulated Depreciation-Building		$ 11,440.00
Accumulated Depreciation-Equipment		$ 9,185.71
Accumulated Depreciation-Spaceships		$ 13,035.00

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