-
Straight Line Depreciation
Cost 55,000, expected salvage value 8,000, Estimated useful life 10 years, Estimated useful miles 470,000.
Tiger Co, buys a delivery truck, January 1, 2020.
Journal entry for December 31, 2024.
Cost - SV / Useful Life= (55,000-8,000) / 10= 4,700
- Depreciation Expense 4,700
- Accumulated Depreciation 4,700
-
Straight Line Depreciation
Cost 55,000, expected salvage value 8,000, Estimated useful life 10 years, Estimated useful miles 470,000.
Tiger Co, buys a delivery truck May 1, 2020.
Journal entry for December 31, 2020.
- (55,000-8,000) / 10 = 4,700
- 4,700 x (8/12) = 3,133.33
- Depreciation Expense 3,133
- Accumulated Depreciation 3,133
-
Units of Activity
Cost 55,000, expected salvage value 8,000, Estimated useful life 10 years, Estimated useful miles 470,000.
Tiger Co, buys a delivery truck on May 1, 2020.
| Units Used Per year | |
|---|
| 2023 | 55,000 | | 2024 | 48,000 | | 2025 | 37,000 | | 2026 | 76,000 | | 2027 | 72,000 | | 2028 | 60,000 |
Journal entry for December 31, 2026
(55,000 - 8,000) / 470,000 = 0.1
76,000(2026) x 0.1 = 7,600
- Depreciation Exp 7,600
- A/P 7,600
-
Adjusting Depreciation
On Jan 1, 2024, Tiger Co. buys some equipment for $20,000 with a useful life of 5 years and a salvage value of $2,000. On Jan. 1, 2026 Tiger Co decides to extend the useful life to 7 years and decrease the salvage value of $1,000. Assume Tiger uses straight lune depreciation. What is the journal entry for December 31, 2027?
- [(20,000-2,000) / 5] x 2 = 7,200
- (Multiply by 2 because 2 years passed from 2024 to 2026)
20,000 - 7,200 = 12,800
- 12,800 - 1,000 / (7-2) = 2,360
- (7 is the new useful life, but we already used 2 years)
- Depreciation Expense 2,360
- Accumulated Depreciation 2,360
-
Sale of Plant Assets
On May 1, 2024 Tiger Co, sells office furniture for $10,000 cash. The furniture originally cost $30,000. As of Jan. 1st 2024, it had accumulated depreciation of $15,000. Depreciation for the first four months of 2024 is 1,000.
Journal entry to record depreciation expense up to the date of the sale.
Journal entry for Tiger Co when the sale is made.
- Depreciation Expense 1,000
- Accumulated Depreciation 1,000
- A/D | 15,000
- | 1,000
- | 16,000
- Cash 10,000
- Accumulated Dep. 16,000
- Loss on Sale 4,000
- Equipment 30,000
-
Sale of Plant Assets
On May 1, 2024 Tiger Co, sells office furniture for $20,000 cash. The furniture originally cost $75,000. As of Jan. 1st 2024, it had accumulated depreciation of $55,000. Depreciation for the first four months of 2024 is 2,500.
Journal entry to record depreciation expense up to the date of the sale.
Journal entry for Tiger co when the sale is made.
- A/D _ | 55,000
- | 2,500
- | 57,500
75,000 - 57,500= 17,500 (BV)
- Proceeds - BV = Dep. exp.
- (20,000 - 17,500) = 2,500
- Depreciation Exp 2,500
- Accumulated Depreciation 2,500
- Cash 20,000
- A/D 57,500
- Gain on Sale 2,500
- Equipment 75,000
-
Retirement of Plant Assets
Assume Tiger Co. retires its delivery truck which costs $50,000. The accumulated depreciation of the delivery truck is $38,000. Record the journal entry for retirement.
- Accumulated Depreciation 38,000
- Loss on disposal 12,000
- Equipment 50,000
-
Retirement of Plant Assets
Assume Tiger Co. retires its delivery truck which costs $50,000. The accumulated depreciation of the truck is $50,000. Record the journal entry for the equipment.
- Accumulated Depreciation 50,000
- Equipment 50,000
|
|