Question

Sheffield Cole Inc. acquired the following assets in January of 2015. Equipment, estimated service life, 5...

Sheffield 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 or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method.

(a) Prepare the general journal entry to record depreciation expense for the equipment in 2018.
(b) Prepare the journal entry to record depreciation expense for the building in 2018.


(Round answers to 0 decimal places, e.g. 125. 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.)

NO. Account Title and Explanation Debit Credit
A
B

Homework Answers

Answer #2

a) Book value as on starting of 2018
depreciaible cost=(cost-salvage)
=(515800-14800)=501000
for first 3years the depreciation is
=((5/15)+(4/15)+(3/15))*501000=400800
Book value at end of 3 years=501000-400800=100200
Deprecaition=(cost-salvage)/years
=(100200-14800)/2
=42700
depreciation expense equipment(db)42700
accumlated depreciaiton equipment (Cr)42700

b)depreciation normal=642000/30=21400
for first 3 years total depreciaiton=21400*3=64200
Book value =642000-64200=577800
Now the depreciaiton=577800/37 (since 3 years is already passed)=15616
Depreciaiton expense building(db)15616
accumlated depreciaiton building (Cr)15616

answered by: anonymous
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