Question - Younger Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1,2010, at a cost of $168,000. Over its 4-year useful life, the bus is ex¬pected to be driven 100,000 miles. Salvage value is expected to be $8,000.
Instructions
(a) Compute the depreciation cost per unit.
(b) Prepare a depreciation schedule assuming actual mileage was: 2010,26,000; 2011,32,000; 2012,25,000; and 2013,17,000.
Question - Kelm Company purchased a new machine on October 1,2010, at a cost of $120,000. The company estimated that the machine will have a salvage value of $12,000. The machine is ex¬pected to be used for 10,000 working hours during its 5-year life.
Instructions
Compute the depreciation expense under the following methods for the year indicated.
(a) Straight-line for 2010.
(b) Units-of-activity for 2010, assuming machine usage was 1,700 hours.
(c) Declining-balance using double the straight-line rate for 2010 and 2011.
Question - Brainiac Company purchased a delivery truck for $30,000 on January 1,2010. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its esti¬mated useful life of 8 years. Actual miles driven were 15,000 in 2010 and 12,000 in 2011.
Instructions
(a) Compute depreciation expense for 2010 and 2011 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining balance method.
(b) Assume that Brainiac uses the straight-line method.
(1) Prepare the journal entry to record 2010 depreciation.
(2) Show how the truck would be reported in the December 31, 2010, balance sheet.
Question - Jerry Grant, the new controller of Blackburn Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2010. His findings are as follows.
|
Type of Asset
|
Date Acquired
|
Cost
|
Accumulated Depreciation 1/1/10
|
Useful Life in Years
|
Salvage Value
|
|
Old Proposed
|
Old Proposed
|
|
Building
Warehouse
|
1/1/04
1/1/05
|
$800,000
100,000
|
$114,000
25,000
|
40 50
25 20
|
$40,000 $37,000
5,000 3,600
|
All assets are depreciated by the straight-line method. Blackburn Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Jerry's proposed changes.
Instructions
(a) Compute the revised annual depreciation on each asset in 2010. (Show computations.)
(b) Prepare the entry (or entries) to record depreciation on the building in 2010.
Question - Presented below are selected transactions at Ingles Company for 2010.
Jan. 1 Retired a piece of machinery that was purchased on January 1, 2000. The machine cost $62,000 on that date. It had a useful life of 10 years with no salvage value.
June 30 Sold a computer that was purchased on January 1, 2007. The computer cost $40,000. It had a useful life of 5 years with no salvage value. The computer was sold for $14,000.
Dec. 31 Discarded a delivery truck that was purchased on January 1, 2006. The truck cost $39,000. It was depreciated based on a 6-year useful life with a $3,000 salvage value.
Instructions
Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of. Ingles Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2009.)