Question

Problem 22-1 (Part Level Submission) Holtzman Company is in the process of preparing its financial statements...

Problem 22-1 (Part Level Submission) Holtzman Company is in the process of preparing its financial statements for 2014. Assume that no entries for depreciation have been recorded in 2014. The following information related to depreciation of fixed assets is provided to you. 1. Holtzman purchased equipment on January 2, 2011, for $57,100. At that time, the equipment had an estimated useful life of 10 years with a $4,100 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2014, as a result of additional information, the company determined that the equipment has a remaining useful life of 4 years with a $2,500 salvage value. 2. During 2014, Holtzman changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $400,000. It had a useful life of 10 years and a salvage value of $38,000. The following computations present depreciation on both bases for 2012 and 2013. 2013 2012 Straight-line $36,200 $36,200 Declining-balance 64,000 80,000 3. Holtzman purchased a machine on July 1, 2012, at a cost of $190,000. The machine has a salvage value of $20,000 and a useful life of 8 years. Holtzman’s bookkeeper recorded straight-line depreciation in 2012 and 2013 but failed to consider the salvage value. Collapse question part (a) Prepare the journal entries to record depreciation expense for 2014 and correct any errors made to date related to the information provided. (Ignore taxes.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Homework Answers

Answer #1

Cost of Equipment $ 57,100

Less: Salvage Value $ 4,100

Depreciable Cost $ 53,000

Depreciation in 2014 ;-

Year Cost Depreciation Cost less Depreciation

2011 $57100 $5300 $51800

2012 $51800 $5300 $46500

2013 $46500 $5300 $41200

Total Depreciation till 2014 = $5300+$5300+$5300

=$15900

Now,

Cost of Equipment in 2014 $41200

(-) Depreciation $15900

Book Value on 01/01/2014 $25300

(-) Salvage Value $ 2500

Depreciable Cost $22800

Depreciation Expense = $22800/4

=$5700

Entry;-

Depreciation Expense $5700

Accumulated Depreciation $5700

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2017, Sandhill Company purchased a building and equipment that have the following useful...
On January 1, 2017, Sandhill Company purchased a building and equipment that have the following useful lives, salvage values, and costs. Building, 40-year estimated useful life, $49,200 salvage value, $828,000 cost Equipment, 12-year estimated useful life, $11,200 salvage value, $99,400 cost The building has been depreciated under the double-declining-balance method through 2020. In 2021, the company decided to switch to the straight-line method of depreciation. Sandhill also decided to change the total useful life of the equipment to 9 years,...
On January 1, 2016, Maria Company purchased a building and machinery that have the following useful...
On January 1, 2016, Maria Company purchased a building and machinery that have the following useful lives, salvage value, and costs. Building, 25-year estimated useful life, $9,480,000 cost, $948,000 salvage value Machinery, 10-year estimated useful life, $1,700,000 cost, no salvage value The building has been depreciated under the straight-line method through 2020. In 2021, the company decided to switch to the double-declining balance method of depreciation for the building. Maria also decided to change the total useful life of the...
Problem 11-9 (Part Level Submission) Cullumber Company uses special strapping equipment in its packaging business. The...
Problem 11-9 (Part Level Submission) Cullumber Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2016 for $10,300,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2017, new technology was introduced that would accelerate the obsolescence of Cullumber’s equipment. Cullumber’s controller estimates that expected future net cash flows on the equipment will be $6,489,000 and that the fair value of the equipment is $5,768,000. Cullumber intends...
9. Milan Company purchased land and an office building on March 1 for a combined cash...
9. Milan Company purchased land and an office building on March 1 for a combined cash price of $1,600,000. The land had a cost of $940,000 and the building had a book value of $200,000 on the seller's books. The land and building had fair market values of $1,040,000 and $560,000, respectively on March 1. Milan made the following entry at acquisition: Land ........................................................................................... 940,000 Building ...................................................................................... 1,000,000 Gain on Purchase .............................................................. 140,000 Accumulated Depreciation ................................................. 200,000 Cash .................................................................................. 1,600,000...
Problem 13-29A (Part Level Submission) Magna Inc. is considering modernizing its production facility by investing in...
Problem 13-29A (Part Level Submission) Magna Inc. is considering modernizing its production facility by investing in new equipment and selling the old equipment. The following information has been collected on this investment. Old Equipment New Equipment Cost $80,960 Cost $38,400 Accumulated depreciation $42,000 Estimated useful life 8 years Remaining life 8 years Salvage value in 8 years $4,512 Current salvage value $10,300 Annual cash operating costs $29,800 Salvage value in 8 years $0 Annual cash operating costs $35,000 Depreciation is...
Exercise 9-9 Presented below are selected transactions at Ridge Company for 2017. Jan. 1 Retired a...
Exercise 9-9 Presented below are selected transactions at Ridge Company for 2017. Jan. 1 Retired a piece of machinery that was purchased on January 1, 2007. The machine cost $61,900 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, 2014. The computer cost $31,200. It had a useful life of 5 years with no salvage value. The computer was sold for $14,600. Dec....
On January 1, 2016, Crane Corporation purchased a building to use as its factory, and some...
On January 1, 2016, Crane Corporation purchased a building to use as its factory, and some equipment to manufacture its product. The following information was determined at the time of purchase: Cost Useful Life Residual Value Depreciation Building $2,320,000 20 years $464,000 Double Declining Equipment $1,060,000 25 years $106,000 Straight Line On January 1, 2019, Crane decided to change the depreciation method for the building to the straight-line method, as a result of a change in the pattern of benefits...
Brief Exercise 22-4 Carla Company changed depreciation methods in 2017 from double-declining-balance to straight-line. Depreciation prior...
Brief Exercise 22-4 Carla Company changed depreciation methods in 2017 from double-declining-balance to straight-line. Depreciation prior to 2017 under double-declining-balance was $95,700, whereas straight-line depreciation prior to 2017 would have been $45,500. Carla’s depreciable assets had a cost of $235,500 with a $36,900 salvage value, and an 7-year remaining useful life at the beginning of 2017. Prepare the 2017 journal entry related to Carla’s depreciable assets (Equipment). (Credit account titles are automatically indented when amount is entered. Do not indent...
Problem 21-03 (Part Level Submission) Cullumber Steel Company, as lessee, signed a lease agreement for equipment...
Problem 21-03 (Part Level Submission) Cullumber Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $53,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Cullumber’s incremental borrowing rate is 9%. Cullumber is unaware of the rate being used by the lessor. At the end of the lease, Cullumber has...
Exercise 22-8 Flounder Cole Inc. acquired the following assets in January of 2015. Equipment, estimated service...
Exercise 22-8 Flounder Cole Inc. acquired the following assets in January of 2015. Equipment, estimated service life, 5 years; salvage value, $14,800 $515,800 Building, estimated service life, 30 years; no salvage value $642,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2018, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT