NAMA : MUTMAINNAH

NIM : 21/486941/PEK/27925
KELAS : MATRIKULASI (A)

Bagian E9.7X

Depreciation expense for 2020 and 2021

(1) The straight-line method

Depreciable cost = Cost - Residual value
= R$38,000 - R$6,000
= R$32,000
Depreciation rate = 100% : Estimated useful life in years
= 100% : 8
= 12.5%

Tanger Interiors
  Computation End of Year
Annual
Depreciatio
Yea Depreciabl Depreciation Accumulated Book
n Rate
r e Cost x Expense Depreciation Value
=
2020 R$32,000 12.5% R$4,000 R$4,000 R$34,000
2021 R$32,000 12.5% R$4,000 R$8,000 R$30,000

(2) The units of activity method

Depreciable cost per unit = Depreciable cost : Total units of activity

= R$32,000 : 100,000
= R$0.32

Tanger Interiors
  Computation Annual End of Year
Yea Units of Depreciation Depreciation Accumulated
Book Value
r Activity x Cost/Unit = Expense Depreciation
2020 15,000 $0.32 R$4,800 R$4,800 R$33,200
2021 12,000 $0.32 R$3,840 R$8,640 R$29,360

(3) The declining-balance method

Depreciation rate = 2 (100% : Estimated useful life in years)

= 2 (100% : 8)
= 2 (12.5%)
= 25%

Tanger Interiors
  Computation End of Year
Annual
Book Value
Depreciation Depreciation Accumulated Book
Year Beginning of
Rate = Expense Depreciation Value
Year x
2020 R$38,000 25% R$9,500 R$ 9,500 R$28,500
2021 R$28,500 25% R$7,125 R$16,625 R$21,375

a. (1) Journal entry

Dec. 31 Depreciation Expense 4,000

Accumulated Depreciation-Equipment 4,000
(To record annual depreciation on delivery truck)
 (2) Tanger Interiors report the following information in its statement of financial position at
December 31, 2020 as shown:
Equipment R$38,000
Less: Accumulated depreciation-equipment 4,000
R$34,000
Bagian E9.13

Depreciable cost = Cost - Residual value

= €50,000 - €8,000
= €42,000
Depreciation rate = 100% : Estimated useful life in years
= 100% : 5
= 20%

Francis Manufacturing
  Computation Annual End of Year
Depreciable Depreciation Depreciation Accumulated Book
Year
Cost x Rate = Expense Depreciation Value
2017 €42,000 20% €8,400 € 8,400 €41,600
2018 €42,000 20% €8,400 €16,800 €33,200
2019 €42,000 20% €8,400 €25,200 €24,800

a. Sold for €28,000 on January 1, 2020

 Computation of gain on disposal:
Cost of equipment €50,000
Less: Accumulated depreciation 25,200
Book value at date of disposal 24,800
Proceeds from sale 28,000
Gain on disposal of plant asset € 3,200

 Francis record the sale and the gain on disposal of the plant asset with the following
entry.

Jan. 1 Cash 28,000

Accumulated Depreciation-Equipment 25,200
Equipment 50,000
Gain on Disposal of Plant Assets 3,200
(To record sale of equipment at a gain)

b. Sold for €28,000 on May 1, 2020

 Depreciation for the first four months of 2020 is €2,800 (€8,400 x 4/12).
Francis record depreciation expense and updates accumulated depreciation to May 1 with
the following entry.

May. 1 Depreciation Expense 2,800

Accumulated Depreciation-Equipment 2,800
(To record depreciation expense for the first four
months of 2020 )

 Computation of gain on disposal:

Cost of equipment €50,000
Less: Accumulated depreciation (€25,200 + €2,800) 28,000
Book value at date of disposal 22,000
Proceeds from sale 28,000
Gain on disposal of plant asset € 6,000
  Francis record the sale and the gain on disposal of the plant asset with the following
entry.

May. 1 Cash 28,000

Accumulated Depreciation-Equipment 28,000
Equipment 50,000
Gain on Disposal of Plant Assets 6,000
(To record sale of equipment at a gain)

c. Sold for €11,000 on January 1, 2020

 Computation of loss on disposal:
Cost of equipment €50,000
Less: Accumulated depreciation 25,200
Book value at date of disposal 24,800
Proceeds from sale 11,000
Loss on disposal of plant asset €13,800
 Francis record the sale and the loss on disposal of the plant asset with the following entry.

Jan. 1 Cash 11,000

Accumulated Depreciation-Equipment 25,200
Loss on Disposal of Plant Assets 13,800
Equipment 50,000
(To record sale of equipment at a loss)

d. Sold for €11,000 on October 1, 2020

 Depreciation for the first nine months of 2020 is €6,300 (€8,400 x 9/12).
Francis record depreciation expense and updates accumulated depreciation to May 1 with
the following entry.

Oct. 1 Depreciation Expense 6,300

Accumulated Depreciation-Equipment 6,300
(To record depreciation expense for the first nine
months of 2020 )

 Computation of loss on disposal:

Cost of equipment €50,000
Less: Accumulated depreciation (€25,200 + €6,300) 31,500
Book value at date of disposal 18,500
Proceeds from sale 11,000
Loss on disposal of plant asset € 7,500

 Francis record the sale and the loss on disposal of the plant asset with the following entry.

Oct. 1 Cash 11,000

Accumulated Depreciation-Equipment 31,500
Loss on Disposal of Plant Assets 7,500
Equipment 50,000
(To record sale of equipment at a loss)

Bagian P9.3
a. (1) Machine A
Cash price of machine R$35,000
Sales taxes 2,200
Shipping costs 150
Insurance during shipping 80
Installation and testing costs 70
Cost of machine A R$37,500
 Pele treat the costs of oil and lubricants as maintenance and repair expense. Pale
record the purchase of the machine A and related expenditures with the following
entry.
Jan. 1 Equipment 37,500
Maintenance and Repairs Expense 100
Cash 37,600
(To record purchase of machine A and related
expenditures)

(2) Annual depreciation on Machine A

Depreciable cost = Cost - Residual value
= R$37,500 – R$5,000
= R$32,500
Annual Depreciation Expense = Depreciable cost : Estimated useful life
= R$32,500 : 5
= R$6,500

 The entry to record the first year’s depreciation:

Dec. 31 Depreciation Expense 6,500

Accumulated Depreciation-Equipment 6,500
(To record annual depreciation on macihene A )

b. (1) Straight-line method

Depreciable cost = Cost - Residual value

= R$80,000 - R$5,000
= R$75,000
Depreciation rate = 100% : Estimated useful life in years
= 100% : 4
= 25%

Pele Industries
  Computation Annual End of Year
Yea Depreciable Depreciation Depreciation Accumulated Book
r Cost x Rate = Expense Depreciation Value
2020 R$75,000 25% R$18,750 R$18,750 R$61,250
2021 R$75,000 25% R$18,750 R$37,500 R$42,500
2022 R$75,000 25% R$18,750 R$56,250 R$23,750
2023 R$75,000 25% R$18,750 R$75,000 R$ 5,000

(2) Declining-balance method

Depreciation rate = 2 (100% : Estimated useful life in years)

= 2 (100% : 4)
= 2 (25%)
= 50%

Pele Industries
  Computation Annual End of Year
Book Value Depreciation Depreciation Accumulated
Year Book Value
Beginning of Year x Rate = Expense Depreciation
2020 R$80,000 50% R$40,000 R$40,000 R$40,000
2021 R$40,000 50% R$20,000 R$60,000 R$20,000
2022 R$20,000 50% R$10,000 R$70,000 R$10,000
2023 R$10,000 50% R$ 5,000 R$75,000 R$ 5,000

(3) Units of activity method

 Depreciable cost per unit = Depreciable cost : Total units of activity
= R$75,000 : 125,000
= R$0.6

Pele Industries
  Computation Annual End of Year
Units of Depreciation Depreciation Accumulated Book
Year
Activity x Cost/Unit = Expense Depreciation Value
2020 42,000 R$0.6 R$25,200 R$25,200 R$54,800
2021 37,000 R$0.6 R$22,200 R$47,400 R$32,600
2022 28,000 R$0.6 R$16,800 R$64,200 R$15,800
2023 18,000 R$0.6 R$10,800 R$75,000 R$ 5,000

c. Compares annual and total depreciation expense under each of the three methods for Pele
Industries.
Straight- Declining Units-of-
Year
Line -Balance Activity
2020 R$18,750 R$40,000 R$25,200
2021 18,750 20,000 22,200
2022 18,750 10,000 16,800
2023 18,750 5,000 10,800
R$75000 R$75,000 R$75,000

 Declining-balance method reports the highest amount of depreciation expense in year 1

(2020) is R$40,000.
 Straight-line method reports the highest amount of depreciation expense in year 4 (2023) is
R$18,750.
 The total amount of depreciation expense is the same (R$75,000) for the 4-year period
under all three methods.