Question
In: Accounting
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, 2022, equipment included in the March 31, 2021,
purchase that cost $99,000 was sold for $79,000. Herzog uses the
straight-line depreciation method for building and equipment and
the double-declining-balance method for vehicles. Partial-year
depreciation is calculated based on the number of months an asset
is in service.
Required:
1. Compute depreciation expense on the building, equipment, and vehicles for 2021.
|
2. Prepare the journal entries to record the depreciation on the equipment sold on June 29, 2022, and the sale of equipment.
| No | Date | General Journal | Debit | Credit |
|---|---|---|---|---|
| 1 | June 29, 2022 | Depreciation expense | ?? | |
| Accumulated depreciation—equipment | ?? | |||
| 2 | June 29, 2022 | Cash | ?? | |
| Accumulated depreciation—equipment | ?? | |||
| Loss on sale of equipment | ?? | |||
| Equipment | 99,000 |
3. Compute depreciation expense on the building,
remaining equipment, and vehicles for 2022.
|
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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...
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 $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 $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, Susquehanna Insurance purchased an office building for $12,300,000. Based on their relative...
On March 31, 2021, Susquehanna Insurance purchased an office
building for $12,300,000. Based on their relative fair values,
one-third of the purchase price was allocated to the land and
two-thirds to the building. Furniture and fixtures were purchased
separately from office equipment on the same date for $1,370,000
and $870,000, respectively. The company uses the straight-line
method to depreciate its buildings and the double-declining-balance
method to depreciate all other depreciable assets. The estimated
useful lives and residual values of these...
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