ACCTMIS 2200 Lecture Notes - Lecture 14: Interest, Asset

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fuchsiaelk478

29 Mar 2017

School

Ohio State University

Department

Accounting and Management Info

Course

ACCTMIS 2200

Professor

Marc Smith

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blushjackal941 and 2 others unlocked

ACCTMIS 2200 Full Course Notes

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Account for capital expenditure made during life of the asset. Not based on time, based on actual usage. Estimates are difficult to develop for most plant assets (like buildings) Depreciable cost per unit = (cost - residual value) / total estimated usage. Depreciable cost per unit * actual usage in current year = depreciation expense d) e) Depreciation based on residual value and useful life (both estimates) a) If change in estimates happens, the new estimates are incorporated into current and future years. To calculate new depreciation expense, depreciate remaining book value based on number of years remaining. Depreciation expense = (remaining book value - new residual value) / number of years left i) Make sure to take into consideration any change in the useful life in # of years left b) c) Exam 3 material page 1 change in the useful life in # of years left. Book value of asset is compared to cash received from sale a)

Related Questions

On March 31, 2018, Susquehanna Insurance purchased an office building for $11,400,000. 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 $1,340,000 and $840,000, 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 assets are as follows: Service Life Residual Value Building 30 10% of cost Furniture and fixtures 10 10% of cost Office equipment 5 $44,000 Required: Calculate depreciation for 2018 and 2019. (Do not round intermediate calculations.)

China Express purchased land for $140,000. Prior to construction on the new building, the land had to be cleared of trees and brush. Construction costs incurred during the first year are listed below:

Land clearing costs	$ 5,000
Architect fees (for new building)	30,000
Legal fees for title investigation of land	1,000
Property taxes on land (for the first year)	2,500
Building construction costs	440,000

Required:
Determine the amounts that should be recorded in the land and the new building accounts.

2. Diamond Autobody purchased some new equipment. The new equipment cost $90,000. The company estimates the equipment will have a residual value of $10,000. Cheetah Copy also estimates it will use the equipment for four years or about 5,000 total hours.

Required:

Prepare a depreciation schedule for three years using the following methods:

1. Straight-line.
2. Double-declining-balance.
3. Activity-based. Actual use per year was as follows:

Year	Hours Used
1	1,200
2	1,400
3	1,500
4	1,100

3. The Snack Stop had the following long-term asset balances as of January 1, 2015:

	Cost	Accumulated Depreciation	Book Value
Land	$90,000	â	$90,000
Building	600,000	($60,000)	540,000
Equipment	200,000	(72,000)	128,000

All of the assets were purchased at the beginning of 2013. The building is depreciated over a 20-year service life using the straight-line method and estimating no residual value. The equipment is depreciated over a 10-year useful life using the double-declining-balance method with an estimated residual value of $10,000. Depreciation has already been calculated for the first two years.

Required:

1. For the year ended December 31, 2015, record depreciation expense for buildings and equipment. Land is not depreciated.

2. Calculate the book value for each of the four long-term assets at December 31, 2015.

orchidlocust51

Plant and equipment D&D applies the half-year rule indepreciating plant and equipment, as well as in amortizingintangible assets. Buildings, mobile equipment, automobiles andoffice equipment are depreciated using the straight-line method.Tools and equipment are depreciated using declining balancemethods. The depreciation rates on tools and equipment vary from17.5% to 33% per year. Computer equipment is depreciated using adouble-declining rate method at 62.5% per year. The property, plantand equipment schedule (located in the Excel worksheet titledâPPE-Studentâ) provides the rates for each category of asset.

On December 5, 20X7, warehouse equipment with a cost of $85,600was delivered. The equipment was immediately put into service. Theuseful life is expected to be 11 years, with an expected salvagevalue of $10,500. This equipment is depreciated using the decliningbalance method at a rate of 17.5%. The invoice for this equipmenthas not been received and the purchase has not been recorded.

In October 20X7, the company disposed of several hand tools. Thecost of these tools was $21,300, and at the time of disposal,accumulated depreciation was $18,899. The equipment sold for totalproceeds of $6,500. The funds received were recorded by the companyas a gain on sale of property, plant and equipment of $6,500.

Depreciation for 20X7 has not yet been recorded for any of thePPE held by the company.

Prepare the journal entry/entries to record the property, plantand equipment transactions. Use the Excel worksheet titledâPPE-Studentâ: i. Update the Additions, Disposals, Revaluations /impairments and Depreciation columns in âPPE-Studentâ (columns Q,R, T and Y, respectively). ii. Record your journal entries in theâAJEs-Studentâ worksheet.

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please message me to see my spreadsheet. I have attempted thisbut to no avail

ivorywoodchuck39

ACCTMIS 2200 Lecture Notes - Lecture 14: Interest, Asset

ACCTMIS 2200 Full Course Notes

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