Question

Doug Smith Industries purchased warehouses for $209 million (no residual value) at the beginning of 2018....

Doug Smith Industries purchased warehouses for $209 million (no residual value) at the beginning of 2018. The warehouses were being depreciated over a 10-year life using the sum-of-the-years'-digits method. At the beginning of 2021, management decided to change to straight-line. Ignoring taxes, the 2021 adjusting entry will include a debit to depreciation expense of: (Round your answer to 2 decimal places.):

Multiple Choice

  • $20.90 million

  • $102.60 million

  • $106.40 million

  • $15.20 million

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The correct answer is option (D) $15.2 million

Purchase Cost - $209 million

Sum of Years' digits formula = N x ((N+1)/2) where N is useful life

2018 Depreciation - 10/55 * $209 million = $38 million

2019 Depreciation - 9/55 * $209 million = $34.2 million

2020 Depreciation - 8/55 * $209 million = $30.4 million

Accumulated Depreciation till December 31, 2020 = $38 m + $34.2 m + $30.4 m

= $102.6 million

Net Book Value as on December 31, 2020 = Purchase Cost - Accumulated Depreciation

= $209 m - $102.6 m

= $106.4 million

Depreciation per Straight Line Method for 2021 = NBV of warehouse as on 1/31/2021 / Useful Life Remaining

= 106.4 / 7

=$15.2 million

In case of any query/clarification please leave a comment below, if the answer was helpful please leave a thumbs up, Thanks!

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Irwin, Inc. constructed a machine at a total cost of $56 million. Construction was completed at...
Irwin, Inc. constructed a machine at a total cost of $56 million. Construction was completed at the end of 2017 and the machine was placed in service at the beginning of 2018. The machine was being depreciated over a 10-year life using the straight-line method. The residual value is expected to be $2 million. At the beginning of 2021, Irwin decided to change to the sum-of-the-years’-digits method. Ignoring income taxes, prepare the journal entry relating to the machine for 2021.
Irwin, Inc., constructed a machine at a total cost of $57 million. Construction was completed at...
Irwin, Inc., constructed a machine at a total cost of $57 million. Construction was completed at the end of 2014 and the machine was placed in service at the beginning of 2015. The machine was being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $2 million. At the beginning of 2018, Irwin decided to change to the straight-line method. Ignoring income taxes, prepare the journal entry relating to the machine for 2018
Orange Corp. constructed a machine at a total cost of $62 million. Construction was completed at...
Orange Corp. constructed a machine at a total cost of $62 million. Construction was completed at the end of 2014 and the machine was placed in service at the beginning of 2015. The machine was being depreciated over a 7-year life using the sum-of-the-years'-digits method. The residual value is expected to be $2 million. At the beginning of 2018, Orange decided to change to the straight-line method. Ignoring income taxes, what will be Orange's depreciation expense for 2018? (Do not...
Irwin, Inc., constructed a machine at a total cost of $47 million. Construction was completed at...
Irwin, Inc., constructed a machine at a total cost of $47 million. Construction was completed at the end of 2014 and the machine was placed in service at the beginning of 2015. The machine was being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $3 million. At the beginning of 2018, Irwin decided to change to the straight-line method. Ignoring income taxes, prepare the journal entry relating to the machine for 2018....
Irwin, Inc., constructed a machine at a total cost of $79 million. Construction was completed at...
Irwin, Inc., constructed a machine at a total cost of $79 million. Construction was completed at the end of 2014 and the machine was placed in service at the beginning of 2015. The machine was being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $2 million. At the beginning of 2018, Irwin decided to change to the straight-line method. Ignoring income taxes, prepare the journal entry relating to the machine for 2018....
Alteran Corporation purchased office equipment for $2.0 million at the beginning of 2019. The equipment is...
Alteran Corporation purchased office equipment for $2.0 million at the beginning of 2019. The equipment is being depreciated over a 10-year life using the double-declining-balance method. The residual value is expected to be $800,000. At the beginning of 2021 (two years later), Alteran decided to change to the straight-line depreciation method for this equipment. Prepare the journal entry to record depreciation for 2021.
Alteran Corpration purchased office equipment for $2.2 million in 2015. The equipment is being depreciated over...
Alteran Corpration purchased office equipment for $2.2 million in 2015. The equipment is being depreciated over 8 year life using the sum of the years digits method. The residual value is expected to be $700000. At the end of 2018. Alteran decided to change to the straight line depreciation method for this equipment. Prepare the journal entry to record depreciation for 2018
George Young Industries (GYI) acquired industrial robots at the beginning of 2018 and added them to...
George Young Industries (GYI) acquired industrial robots at the beginning of 2018 and added them to the company’s assembly process. During 2021, management became aware that the $2.7 million cost of the equipment was inadvertently recorded as repair expense on GYI’s books and on its income tax return. The industrial robots have 10-year useful lives and no material salvage value. This class of equipment is depreciated by the straight-line method for financial reporting purposes and for tax purposes it is...
Alteran Corporation purchased office equipment for $1.5 million at the beginning of 2019. The equipment is...
Alteran Corporation purchased office equipment for $1.5 million at the beginning of 2019. The equipment is being depreciated over a 10-year life using the double-declining-balance method. The residual value is expected to be $300,000. At the beginning of 2021 (two years later), Alteran decided to change to the straight-line depreciation method for this equipment. Required: Prepare the journal entry to record depreciation for 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first...
Alteran Corporation purchased office equipment for $1.4 million at the beginning of 2019. The equipment is...
Alteran Corporation purchased office equipment for $1.4 million at the beginning of 2019. The equipment is being depreciated over a 10-year life using the double-declining-balance method. The residual value is expected to be $600,000. At the beginning of 2021 (two years later), Alteran decided to change to the straight-line depreciation method for this equipment. Required: Prepare the journal entry to record depreciation for 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT