Question

Exercise 11-9 Presented below is information related to Riverbed Manufacturing Corporation. Asset Cost Estimated Salvage Estimated...

Exercise 11-9

Presented below is information related to Riverbed Manufacturing Corporation.

Asset Cost Estimated Salvage Estimated Life (in years)
A $44,550 $6,050 10
B $36,960 5,280 9
C 39,600 3,960 9
D 20,900 1,650 7
E 25,850 2,750 6

1. Compute the rate of depreciation per year to be applied to the plant assets under the composite method. (Round answer to 2 decimal place, e.g. 4.83%.)

Composite rate ________________%

2. Prepare the adjusting entry necessary at the end of the year to record depreciation for the year. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Use Plant Assets related account.)

Account Titles and Explanation Debit Credit

Prepare the entry to record the sale of asset D for cash of $5,280. It was used for 6 years, and depreciation was entered under the composite method. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Use Plant Assets related account.)

Account Titles and Explanation Debit Credit

List of Accounts

Accumulated Depreciation-Building
Accumulated Depreciation-Equipment
Accumulated Depreciation-Machinery
Accumulated Depreciation-Plant Assets
Accumulated Depreciation-Trucks
Buildings
Cash
Coal Mine
Depreciation Expense
Equipment
Gain on Disposal of Machinery
Inventory
Loss on Disposal of Plant Assets
Loss on Impairment
Machinery
Maintenance and Repairs Expense
No Entry
Paid-in Capital in Excess of Par - Common Stock
Plant Assets
Recovery of Loss from Impairment
Retained Earnings
Trucks

Homework Answers

Answer #1

Solution: 1

Asset Asset Cost Estimated Salvage Estimated Life Depreciable Amount
(Cost - salvage)
Annual Depreciation
(Depreciable Amount/ Estmated Life
A $44,550.00 $6,050.00 10 $38,500.00 $3,850.00
B $36,960.00 $5,280.00 9 $31,680.00 $3,520.00
C $39,600.00 $3,960.00 9 $35,640.00 $3,960.00
D $20,900.00 $1,650.00 7 $19,250.00 $2,750.00
E $25,850.00 $2,750.00 6 $23,100.00 $3,850.00
Total $167,860.00 $17,930.00

Composite Rate = (Total Annual Depreciation / Total Asset Cost) *100 = $17930/$167860 *100 = 10.68%

Solution 2:

S. No. Account Titles and Explanation Debit Credit
1 Depreciation Expenses Dr $17,930.00
      To Accumulated depreciation $17,930.00
(To Record depreciation for The Year)
2 Cash A/c Dr $5,280.00
Accumulated Depreciation Dr (Balsnce Fig.) $15,620.00
            To Asset D $20,900.00
[To record sale of Asset D. (No Loss or gain recognised)]
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