Question

Exercise 9-6 Victor Mineli, the new controller of Crane Company, has reviewed the expected useful lives...

Exercise 9-6

Victor Mineli, the new controller of Crane Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2017. Here are his findings:

Type of
Asset
Date
Acquired
Cost
Accumulated
Depreciation,
Jan. 1, 2017
Useful Life (in years)
Salvage Value
Old
Proposed
Old
Proposed
Building
Jan. 1, 2009 $772,000 $141,800 40 48 $63,000 $35,200
Warehouse
Jan. 1, 2012 164,000 31,690 25 20 5,550 5,400


All assets are depreciated by the straight-line method. Crane Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Victor’s proposed changes. (The “Proposed” useful life is total life, not remaining life.)

Compute the revised annual depreciation on each asset in 2017. (Round answers to 0 decimal places, e.g. 125.)

Building
Warehouse
Revised annual depreciation
$enter a dollar amount
$enter a dollar amount

LINK TO TEXT

Prepare the entry to record depreciation on the building in 2017. (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.)

Account Titles and Explanation
Debit
Credit
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount

Homework Answers

Answer #1

Solution :-

Compute the revised annual depreciation on each asset in 2017 :-

Building Warehouse
Revised annual depreciation

= [ $772,000 - $141,800 - $35,200 ] / 40

= [ $772,000 - 177,000 ] / 40

= 595,000 / 40

= $14,875

= [ $164,000 - $31,690 - $5,400 ] / [ 40 - 25 ]

= [ 164,000 - 37,090 ] / 15

= 126,910 / 15

= $8,460

Prepare the entry to record depreciation on the building in 2017 :-

Particulars Debit Credit
Depreciation expense $14,875
Accumulated depreciation - building $14,875
( To record depreciation on buildings )
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
Exercise 9-6 Victor Mineli, the new controller of Cullumber Company, has reviewed the expected useful lives...
Exercise 9-6 Victor Mineli, the new controller of Cullumber Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2017. Here are his findings: Type of Asset Date Acquired Cost Accumulated Depreciation, Jan. 1, 2017 Useful Life (in years) Salvage Value Old Proposed Old Proposed Building Jan. 1, 2009 $814,500 $149,500 40 48 $67,000 $36,800 Warehouse Jan. 1, 2012 123,000 23,680 25 20 4,600 3,800 All assets are depreciated by the straight-line...
Exercise 12-13 Presented below is information related to copyrights owned by Crane Company at December 31,...
Exercise 12-13 Presented below is information related to copyrights owned by Crane Company at December 31, 2020. Cost $8,530,000 Carrying amount 4,260,000 Expected future net cash flows 3,930,000 Fair value 3,580,000 Assume that Crane Company will continue to use this copyright in the future. As of December 31, 2020, the copyright is estimated to have a remaining useful life of 10 years. A.) Prepare the journal entry to record the impairment of the asset at December 31, 2020. The company...
Tamarisk Assets Inc., a publicly listed company, has a building with an initial cost of $433,000....
Tamarisk Assets Inc., a publicly listed company, has a building with an initial cost of $433,000. At December 31, 2020, the date of revaluation, accumulated depreciation amounted to $119,000. The fair value of the building, by comparing it with transactions involving similar assets, is assessed to be $345,400. On January 5, 2021, Tamarisk sold the building for $340,400 cash. Prepare the journal entries to record the sale of the building after having used the cost model. (Credit account titles are...
Exercise 9-12 On January 1, 2017, Carla Vista Co. had a balance of $347,500 of goodwill...
Exercise 9-12 On January 1, 2017, Carla Vista Co. had a balance of $347,500 of goodwill on its balance sheet that resulted from the purchase of a small business in a prior year. The goodwill had an indefinite life. During 2017, the company had the following additional transactions. Jan. 2 Purchased a patent (6-year life) $332,850. July 1 Acquired a 10-year franchise; expiration date July 1, 2027, $604,800. Sept. 1 Research and development costs $187,500. Prepare the necessary entries to...
Novak Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5...
Novak Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5 years; salvage value, $15,400 $547,900 Building, estimated service life, 30 years; no salvage value $708,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2021, 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...
Ivanhoe Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5...
Ivanhoe Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5 years; salvage value, $14,800 $560,800 Building, estimated service life, 30 years; no salvage value $690,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2021, 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...
Exercise 5-04 The following transactions are for Larkspur Company. 1. On December 3, Larkspur Company sold...
Exercise 5-04 The following transactions are for Larkspur Company. 1. On December 3, Larkspur Company sold $512,700 of merchandise to Crane Co., on account, terms 1/10, n/30. The cost of the merchandise sold was $321,500. 2. On December 8, Crane Co. was granted an allowance of $26,000 for merchandise purchased on December 3. 3. On December 13, Larkspur Company received the balance due from Crane Co. (a) Prepare the journal entries to record these transactions on the books of Larkspur....
Crane Company in its first year of operations provides the following information related to one of...
Crane Company in its first year of operations provides the following information related to one of its available-for-sale debt securities at December 31, 2020. Amortized cost $50,700 Fair value 41,400 Expected credit losses 12,400 What is the amount of the credit loss that Crane should report on this available-for-sale security at December 31, 2020? Amount of the credit loss $ Prepare the journal entry to record the credit loss, if any (and any other adjustment needed), at December 31, 2020....
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,...
Presented below are selected transactions for the Cullumber Company for 2023. Jan. 1 Retired a piece...
Presented below are selected transactions for the Cullumber Company for 2023. Jan. 1 Retired a piece of equipment that was purchased on January 1, 2013. The equipment cost $75,000 on that date and had a useful life of 10 years with no salvage value. April 30 Sold equipment for $38,000 that was purchased on January 1, 2020. The equipment cost $105,000 and had a useful life of 5 years with no salvage value. Dec. 31 Discarded equipment that was purchased...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT