COMMERCE 1BA3 Study Guide - Stra, Historical Cost, Deferred Tax

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 1BA3
• Professor: Aadil Merali Juma

Document Summary

Simba trailers specializes in assembling containers for trucks. They use heavy machinery in an assembly plant with the following history: January 1, 2007: bought heavy duty equipment for ,000 with a useful life of 10 years and a salvage value of ,000. September 1, 2010: annual inspection this year indicates that the total useful life of the equipment must be revised to 8 years due to heavy usage and the salvage value reduced to ,000. October 1, 2012: simba trailers decide to sell this equipment for ,000 cash. Rate = 2 ul = 2 10 = 20% Therefore depreciation for 2004 = (20% x ,000) = ,000. Therefore bv = ,000 ,000 = ,000. For all remaining parts, assume simba trailers uses the straight line method of depreciation: what is the depreciation expense and the adjusting entry for the year ending december 31, 9,000: what is the depreciation expense for 2010 and the adjusting entry to record it.