Question

The balance sheets of Tully Corp. showed the following at December 31, 2017, and 2016: December...

The balance sheets of Tully Corp. showed the following at December 31, 2017, and 2016:

December 31, 2017 December 31, 2016
Equipment, less accumulated depreciation of $111,400 at December 31, 2017, and $69,625 at December 31, 2016. $ 83,800 $ 125,575

a. If there have not been any purchases, sales, or other transactions affecting this equipment account since the equipment was first acquired, what is the amount of depreciation expense for 2017?

Assume the same facts as in part a, and assume that the estimated useful life of the equipment is four years and the estimated salvage value is $28,100.

b-1. What was the original cost of the equipment?

b-2. What depreciation method is apparently being used?

Straight-line method
Double-declining balance method
Written down value method
Sum-of-the-years' digits method
Units of production method

b-3. When the equipment was acquired?

May 1, 2015
July 1, 2014
August 1, 2015
June 1, 2014
May 1, 2014

Homework Answers

Answer #1

Ans:

A). Depreciation expense for 2017= (111,400-69,625)

=41,775

(Depreciation expense is the difference between accumulated depreciation for two years)

B). Original cost of equipment=

We know Straight line method of depreciation = cost- salvage value/ estimated useful life

41,775 = (x-28,100)/4

41775*4= x-28,100

167,100=x-28,100

195,200= X

thus cost- 195,200

C). The correct option for depreciation method which is apparently being used is A i.e. Straight- line method

D). the correct option for the above answer is option A i.e. May 1, 2015

value as on may 1,2015 =195,200

Less: depreciation for 8 months (41775*8/12)= (27850)

Value on 1 jan 2016= 167350

Less: depreciation for year (41775)

value on 31 dec 2016= 125575

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