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    bella
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    The document presents three methods for calculating depreciation expense for a machine over 8 years: (1) straight-line method, (2) sum of the years' digits method, and (3) double-declining balance method. It calculates the depreciation expense and accumulated depreciation for the machine's first year under each method. The recommended method is the activity method as it measures depreciation based on a company's actual production and sales.

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    The document presents three methods for calculating depreciation expense for a machine over 8 years: (1) straight-line method, (2) sum of the years' digits method, and (3) double-declining balance method. It calculates the depreciation expense and accumulated depreciation for the machine's first year under each method. The recommended method is the activity method as it measures depreciation based on a company's actual production and sales.

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    11 views7 pages

    Chapter 11

    Uploaded by

    bella
    The document presents three methods for calculating depreciation expense for a machine over 8 years: (1) straight-line method, (2) sum of the years' digits method, and (3) double-declining balance method. It calculates the depreciation expense and accumulated depreciation for the machine's first year under each method. The recommended method is the activity method as it measures depreciation based on a company's actual production and sales.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 7

    (a) Cost 9,000,000

    Less : accumulated depreciation to date 1,000,000


    Carrying amount 8,000,000

    Recoverable amount
    Value in use 7,000,000
    Fair value less cost of capital 4,400,000
    Recoverable amount 7,000,000

    Pujols Spa
    Journal Entry
    at Dec 31, 2019
    Loss on impairment 1,000,000
    Accumulated depreciation-equipment 1,000,000

    (b) Carrying value after impairment loss 7,000,000


    Remaining useful life (year) 4
    Accumulated depreciation per year 1750000

    Pujols Spa
    Journal Entry
    at Dec 31, 2019
    Depreciation expense 1750000
    Accumulated depreciation-equipment 1750000

    (c) Cost of equipment 7,000,000


    Less : Accumulated depreciation per year 1750000
    Carrying amount at 2020 5,250,000

    Carrying amount at 2020 5,250,000


    Less : Recoverable amount 6,000,000
    Recovery of impairment loss -750,000

    Pujols Spa
    Journal Entry
    at Dec 31, 2019
    Accumulated depreciation-equipment 750,000
    Recovery of impairment loss 750,000
    Loss on impairment
    Carrying value before impairment loss 8,000,000
    Less : Recoverable amount 7,000,000
    Loss on impairment 1,000,000
    Cost per barrel of oil :
    Initial payment $ 600,000 $ 2.40
    250,000
    Rental $ 31,500 $ 1.75
    18,000
    Premium (5% of $65) $ 3.25
    Reconditioning of land $ 30,000 $ 0.12
    250,000
    Total cost per barrel $ 7.52
    (a) 1 Depreciable base computation: Year
    Purchase price $ 85,000 2019
    Less : Purchase discount (2%) $ 1,700 2020
    Freight in $ 800 2021
    Installation costs $ 3,800 2022
    Total cost of machine $ 87,900 2023
    Less : Salvage value $ 1,500 2024
    Depreciation base $ 86,400 2025
    2026
    Depreciation using straight-line method 2027
    ($86,400 : 8 years) x 2/3 year $ 7,200

    Book value (2019) $ 86,400


    Less : Accumulated depreciation-equipment $ 7,200
    Book value after depreciation $ 79,200

    2 Sum of the years digit method for 2020 Year


    Sum of 8 years useful life 36 2019
    2020
    Depreciation for 2019 2021
    Book value (2019) $ 86,400 2022
    Less : Accumulated depreciation-equipment $ 12,800.00 2023
    Book value after depreciation $ 73,600 2024
    2025
    Depreciation for 2020 2026
    Book value (2019) $ 86,400 2027
    Less : Accumulated depreciation-equipment $ 17,600.00
    Book value after depreciation $ 68,800.00

    3 Double-declining balance for 2019 Year


    Depreciable cost $ 87,900 2019
    Less : Accumulated depreciation-equipment $ 14,650 2020
    Book value after depreciation $ 73,250 2021
    2022
    2023
    2024
    2025
    2026
    2027

    (b)

    Jadi, metode yang disarankan adalah activity method karena metode tersebut mengukur
    depresiasi dari produksi dan penjualan yang dialami oleh perusahaan tersebut.
    Jadi, metode yang disarankan adalah activity method karena metode tersebut mengukur
    depresiasi dari produksi dan penjualan yang dialami oleh perusahaan tersebut.
    Depreciable base Years Annual Expense Partial Year Current Year Expense
    $ 86,400 8 $ 10,800 0.67 $ 7,200.00
    $ 86,400 8 $ 10,800 $ 10,800
    $ 86,400 8 $ 10,800 $ 10,800
    $ 86,400 8 $ 10,800 $ 10,800
    $ 86,400 8 $ 10,800 $ 10,800
    $ 86,400 8 $ 10,800 $ 10,800
    $ 86,400 8 $ 10,800 $ 10,800
    $ 86,400 8 $ 10,800 $ 10,800
    $ 86,400 8 $ 10,800 0.33 $ 3,600.00
    $ 86,400.00

    Depreciable base Years Annual Expense Partial Year Current Year Expense
    $ 86,400 0.22 $ 19,200.00 0.67 $ 12,800.00
    $ 86,400 0.20 $ 17,600.00 $ 17,600.00
    $ 86,400 0.18 $ 15,200.00 $ 15,200.00
    $ 86,400 0.15 $ 12,800.00 $ 12,800.00
    $ 86,400 0.12 $ 10,400.00 $ 10,400.00
    $ 86,400 0.09 $ 8,000.00 $ 8,000.00
    $ 86,400 0.06 $ 5,600.00 $ 5,600.00
    $ 86,400 0.04 $ 3,200.00 $ 3,200.00
    $ 86,400 0.01 $ 800.00 $ 800.00
    $ 86,400.00

    Depreciable base Years Annual Expense Partial Year Current Year Expense
    $ 87,900 25% $ 21,975 0.67 $ 14,650.00
    $ 73,250.00 25% $ 18,312.50 $ 18,312.50
    $ 54,937.50 25% $ 13,734.38 $ 13,734.38
    $ 41,203.13 25% $ 10,300.78 $ 10,300.78
    $ 30,902.34 25% $ 7,725.59 $ 7,725.59
    $ 23,176.76 25% $ 5,794.19 $ 5,794.19
    $ 17,382.57 25% $ 4,345.64 $ 4,345.64
    $ 13,036.93 25% $ 3,259.23 $ 3,259.23
    $ 9,777.69 25% $ 2,444.42 $ 8,277.69
    $ 86,400.00
    Accumulated Depreciation
    $ 7,200.00
    $ 18,000.00
    $ 28,800.00
    $ 39,600.00
    $ 50,400.00
    $ 61,200.00
    $ 72,000.00
    $ 82,800.00
    $ 86,400.00

    Accumulated Depreciation
    $ 12,800.00
    $ 30,400.00
    $ 45,600.00
    $ 58,400.00
    $ 68,800.00
    $ 76,800.00
    $ 82,400.00
    $ 85,600.00
    $ 86,400.00

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