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Chapter 8 hw - M8-4 Straight Line Formula(cost residual...

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M8-4 Straight- Line Formula: (cost – residual value) X 1/Useful Life =depreciation Expense ($21,000- 1,000) X 1/(4 years)= $5,000 per year. So three-year-old machine has a book value of $6,000 M8-5 Double-declining-balance Formula: (cost – accumulated Depreciation) X 2/Useful life = depreciation Expense ($25,000 – $0 first year) X 2/ (5 yrs) = $10,000 ($25,000 – $10,000 second year) X 2/ (5 yrs) = $6,000 ($25,000 – $16,000) X 2/ (5 yrs) = $3,600 $10,000 + 6,000 + 3,600 = $19,600 = accumulated depreciation Net book value = $5,400 M8-6 Units-of-production formula: ( - ) × = cost Residual Value Estimated Total Production Actual Production Depreciation Expense , - , , × , = , $21 000 $1 00020 000 Machine hours 17 750 hours used $17 750 $21,000 - $17,750 = $3,250 = Net book value M8-8 (cost – residual value) X 1/Useful Life =depreciation Expense ($6,000 - $800) X 1/ 13 yrs = $400 per year $6,000 - $4,000 = Net book value = $2,000 Update depreciation expense for year 10: Depreciation Expense (+ E, - SE) $400 Accumulated Depreciation (+XA, -A) $400 Record of Sale: Cash (+A) $3,000 Accumulated Depreciation (-XA, +A) $4,000 Store fixtures (-A) $6,000 Gain on Sale (+Gain, +SE) $1,000 P8-6 Jensen Company Machine Cash (+A) $9,200
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A Accumulated Depreciation (-XA, +A) 13,500 Machine A (Equipment) (-A) 21,000 Gain on Machine A (+SE) 1,700
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