023145015

Tyas Widyanti

Chapter 9
Plant Assets, Natural Resources and Intangible
Assets
P9-1B
Item
1
2
3
4
5
6
7
8
9
10

Land
$9,000

Building

Other Accounts
$6,500

(tax expense)

$500,000
$19,000
$100,000
$18,000
$9,000
$6,000

(installation
expense)

$19,000
($3,800)
+
$124, 200

+
$528,000

+
$30,500

P9-3B
a) 1. Journal
January 1, 2014 | Equipment $ 58,090
|
Cash
$ 58,090
(Cost = $55,000 + $2,750 + $100 + $75 + $75 + $90 = $58,090)
2. Straight Line Method
Cost: $58,090
Residual Value: $6,000
Useful Life: 4 years
Annual Depreciation Expense
Cost Residual Value
Useful Life
$58,090 - $6,000
4

= $13,022.5 $13,000

023145015
Tyas Widyanti

Depreciation
Expense

Year

Accumulated
Depreciation

Book Value

2014, January
$58,090
2014,
$13,000
$13,000
$45,090
December
Journal
December 31, 2014 | Depreciation Expense
$13,000
| Accumulated Depreciation
$13,000

b) Cost: $130,000
Residual Value: $10,000
Useful Life: 5 years
1. Straight Line Method
Annual Depreciation Expense
Cost Residual Value
Useful Life
$130,000 - $10,000
5
Year
2014, January
2014, December
2015
2016
2017
2018

= $24,000
Depreciation
Expense

Accumulated
Depreciation

$24,000
$24,000
$24,000
$24,000
$24,000

$24,000
$48,000
$72,000
$96,000
$120,000

Book Value
$130,000
$106,000
$82,000
$58,000
$34,000
$10,000

2. Declining Balance Method

Double Declining Rate (DDR)
100%
Useful Life
100%
5

Year

X2
X 2 = 40%

Beginning
Book Value

DDR

Annual
Depreciati

Accumulat
ed

Ending
Book

023145015
Tyas Widyanti
on
Expense
2014, January
2014,
December
2015
2016
2017
2018

Depreciati
on

Value

$130,000

40%

$52,000

$52,000

$130,000
$78,000

$78,000
$46,800
$28,080
$16,848

40%
40%
40%
40%

$31,200
$18,720
$11,232
$6,739.2

$83,200
$101,920
$113,152
$119,891.2

$46,800
$28,080
$16,848
$10,108.2

3. Unit Of Act
Depreciation Expense Per Unit

Cost - Residual
Value
$130,000 - $10,000
Total Unit
24,000

Year
2014, January
2014,
December
2015
2016
2017
2018

Sum of
Annual
Unit

= $5
Depreciati
on
Expense
per Unit

Annual
Depreciati
on
Expense

Accumulat
ed
Depreciati
on

Book
Value
$130,000

4,700

$5

$23,500

$23,500

$106,500

7,000
8,000
2,500
1,800

$5
$5
$5
$5

$35,000
$40,000
$12,500
$9,000

$58,500
$98,500
$111,000
$120,000

$71,500
$31,500
$19,000
$10,000

c) Machine B
1. The lowest amount of depreciation expense in 2014 is calculated
using Unit of Act.
2. The lowest amount of depreciation expense in 2018 is calculated
using Declining Balance Method.
3. The lowest total amount of depreciation expense over the 5-year
period is calculated using Declining Balance Method.