Flounder Company is in the process of preparing its financialstatements for 2017. Assume that no entries for depreciation havebeen recorded in 2017. The following information related todepreciation of fixed assets is provided to you.
1)Flounder purchased equipment on January 2, 2014, for $76,900.At that time, the equipment had an estimated useful life of 10years with a $4,900 salvage value. The equipment is depreciated ona straight-line basis. On January 2, 2017, as a result ofadditional information, the company determined that the equipmenthas a remaining useful life of 4 years with a $3,100 salvagevalue.
2)During 2017, Flounder changed from thedouble-declining-balance method for its building to thestraight-line method. The building originally cost $280,000. It hada useful life of 10 years and a salvage value of $28,000. Thefollowing computations present depreciation on both bases for 2015and 2016.
2016
2015
Straight-line $25,200 $25,200 Declining-balance 44,800 56,000
3)Flounder purchased a machine on July 1, 2015, at a cost of$110,000. The machine has a salvage value of $16,000 and a usefullife of 8 years. Flounderâs bookkeeper recorded straight-linedepreciation in 2015 and 2016 but failed to consider the salvagevalue.
Prepare the journal entries to record depreciation expense for2017 and correct any errors made to date related to the informationprovided. (Ignore taxes.) (Credit account titles areautomatically indented when amount is entered. Do not indentmanually. If no entry is required, select "No Entry" for theaccount titles and enter 0 for the amounts.)
Show comparative net income for 2016 and 2017. Income beforedepreciation expense was $280,000 in 2017, and was $310,000 in2016. (Ignore taxes.)
Flounder Company is in the process of preparing its financialstatements for 2017. Assume that no entries for depreciation havebeen recorded in 2017. The following information related todepreciation of fixed assets is provided to you.
1)Flounder purchased equipment on January 2, 2014, for $76,900.At that time, the equipment had an estimated useful life of 10years with a $4,900 salvage value. The equipment is depreciated ona straight-line basis. On January 2, 2017, as a result ofadditional information, the company determined that the equipmenthas a remaining useful life of 4 years with a $3,100 salvagevalue. | ||
| 2)During 2017, Flounder changed from thedouble-declining-balance method for its building to thestraight-line method. The building originally cost $280,000. It hada useful life of 10 years and a salvage value of $28,000. Thefollowing computations present depreciation on both bases for 2015and 2016. |
2016 | 2015 | |||
| Straight-line | $25,200 | $25,200 | ||
| Declining-balance | 44,800 | 56,000 |
| 3)Flounder purchased a machine on July 1, 2015, at a cost of$110,000. The machine has a salvage value of $16,000 and a usefullife of 8 years. Flounderâs bookkeeper recorded straight-linedepreciation in 2015 and 2016 but failed to consider the salvagevalue. Prepare the journal entries to record depreciation expense for2017 and correct any errors made to date related to the informationprovided. (Ignore taxes.) (Credit account titles areautomatically indented when amount is entered. Do not indentmanually. If no entry is required, select "No Entry" for theaccount titles and enter 0 for the amounts.) Show comparative net income for 2016 and 2017. Income beforedepreciation expense was $280,000 in 2017, and was $310,000 in2016. (Ignore taxes.) |
Related questions
Depreciation by Three Methods; Partial Years
Razar Sharp Company purchased equipment on July 1, 2014, for$48,870. The equipment was expected to have a useful life of threeyears, or 4,320 operating hours, and a residual value of $1,350.The equipment was used for 800 hours during 2014, 1,500 hours in2015, 1,300 hours in 2016, and 720 hours in 2017.
Required:
Determine the amount of depreciation expense for the years endedDecember 31, 2014, 2015, 2016, and 2017, by (a) the straight-linemethod, (b) units-of-output method, and (c)thedouble-declining-balance method.
Note: FOR DECLINING BALANCE ONLY, round the multiplier to fourdecimal places. Then round the answer for each year to the nearestwhole dollar.
a. Straight-line method
| Year | Amount |
| 2014 | $ |
| 2015 | $ |
| 2016 | $ |
| 2017 | $ |
b. Units-of-output method
| Year | Amount |
| 2014 | $ |
| 2015 | $ |
| 2016 | $ |
| 2017 | $ |
c. Double-declining-balance method
| Year | Amount |
| 2014 | $ |
| 2015 | $ |
| 2016 | $ |
| 2017 | $ |
