Accounting questions help! 2

2008-07-17 9:45 pm

On January 1, 2004, Hovislle Co, purchased a new machinery for $200,000. The estimated life of the machinery was 10 years, with an estimated residual value of $20,000.

Required:

(1)Compute the depreciation on this machinery in 2004 and 2005 by using Straight-line method, and 200%-declining balance method.
(8 marks)

(2)The company sold this machinery on December 31, 2005 for $170,000. Prepare journal entry to record the sale of the machinery, assuming that the company adopted straight-line method.
(9 marks)

回答 (1)

月光光

2008-07-19 6:45 pm

✔ 最佳答案

1)
The machinery depreciation per year by the straight-line method is $18,000 and is calculated as follows:
(Cost – Salvage) / Service life in years = ($200,000 - $20,00) / 10 = $18,000
Double this rate to get a declining-balance is $18,000 x 2 =$36,000

(2)
Dec 31, 2005

Cash(or Bank)

$170,000

Accumulated Depreciation, Machinery

$36,000

Machinery

$200,000

Gain on the Sale of Machinery

$6,000

Sold a machine at price in excess of book value

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