Professional Documents
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05
Mohamed Bakar Alidini recently formed a business in the Republic of Yemen to process liquefied natural gas
for export to other countries. Natural gas can be converted to a liquid by cooling it to -163 degrees Celsius.
It then assumes a highly compressed state and can be transported by specially designed cryogenic vessels.
Mohamed's business invested 80,000,000 (Yemeni Rials/YER) in a cooling/containment chamber with a 4-
year life. The chamber will have no remaining value at the end of the 4-year period.
(a) Prepare journal entries to record annual depreciation for each of the four years, assuming Alidini
uses the straight-line method.
(b) Show how the annual depreciation will appear in each year's income statement.
(c) Show how the asset, and related accumulated depreciation, will appear in each year's balance
sheet.
Name:
B-03.05 (a)
Date: Section:
GENERAL JOURNAL
ALIDINI CORPORATION
Income Statement
For the Year Ending December 31, 20X1
Cost of Goods Sold
Expenses
Operational Expenses
Depreciation
Total Expense
ALIDINI CORPORATION
Balance Sheet
December 31, 20X1
Assets
Fixed Assets
Cooling chamber 80,000,000
Less: Accumulated depreciation (20,000,000)
Total Fixed Assets 60,000,000
ALIDINI CORPORATION
Income Statement
For the Year Ending December 31, 20X2
Cost of Goods Sold
Expenses
Operational Expenses
Depreciation
Total Expense
ALIDINI CORPORATION
Balance Sheet
December 31, 20X2
Assets
Fixed Assets
Cooling chamber
Less: Accumulated depreciation
Total Fixed Assets
Name:
B-03.05(b,c)
Date: Section:
ALIDINI CORPORATION
Income Statement
For the Year Ending December 31, 20X3
Cost of Goods Sold
Expenses
Operational Expenses
Depreciation
Total Expense
ALIDINI CORPORATION
Balance Sheet
December 31, 20X3
Assets
Fixed Assets
Cooling chamber
Less: Accumulated depreciation
Total Fixed Assets
ALIDINI CORPORATION
Income Statement
For the Year Ending December 31, 20X4
Cost of Goods Sold
Expenses
Operational Expenses
Depreciation
...
ALIDINI CORPORATION
Balance Sheet
December 31, 20X4
Assets
Fixed Assets
Cooling chamber
Less: Accumulated depreciation
Total Fixed Assets