No c hange was made in the es timated res idual v

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Unformatted text preview: ienc e with the mac hine, management dec ided to rev is e its es timated life from 12 y ears to 20 y ears . No c hange was made in the es timated res idual v alue. The rev is ed es timate of the us eful life was dec ided prior to rec ording annual deprec iation ex pens e for the y ear ended Dec ember 31, 2011. a. Prepare journal entries in c hronologic al order for the abov e ev ents , beginning with the purc has e of the mac hinery on J anuary 11, 2007. Show s eparately the rec ording of deprec iation ex pens e in 2007 through 2011. (Om it the "$" sign in your response.) Date 2007 J an. 11 Dec . 31 General J ournal Mac hinery Cas h Deprec iation ex pens e: Mac hinery 2008­ 2010 Dec . 31 2011 Dec . 31 Debit Credit 90,000 6,000 90,000 Ac c umulated deprec iation: Mac hinery 6,000 6,000 3,000 6,000 3,000 Deprec iation ex pens e: Mac hinery Ac c umulated deprec iation: Mac hinery Deprec iation ex pens e: Mac hinery Ac c umulated deprec iation: Mac hinery Explanation: To rec ord deprec iation for firs t y ear: ($90,000 – $18,000) × 1/12 = $6,000 To rec ord deprec iation for fifth y ear, bas ed on rev is ed es timate of us eful life, determined as follows : Cos t of mac hine $ 90,000 Les s : Deprec iation for 2007­2010 24,000 Book v alue at end of 2010 $ 66,000 Les s : Res idual v alue 18,000 Amount to be deprec iated ov er 16 remaining y ears of new es timated us eful life $ 48,000 e z to.mhe c loud.mc gr a w- hill.c om/hm_a c c ounting.tpx? todo= pr intvie w 2/6 11/18/13 Assignme nt Pr int Vie w Deprec iation per y ear ($48,000 ÷ 16) $ 3,000 3. awar d: 15 out of 15.00 points During the c urrent y ear, Airport Auto Rentals purc has ed 60 new automobiles at a c os t of $14,000 per c ar. The c ars will be s old to a wholes aler at an es timated $5,000 eac h as s oon as they hav e been driv en 50,000 miles . Airport Auto Rentals c omputes deprec iation ex pens e on its automobiles by the units ­of­ output method, bas ed on mileage. a. Compute the amount of deprec iation to be rec ogniz ed for eac h mile that a rental automobile is driv en. (Round your answer to 2 decim al places. Om it the "$" sign in your response.) Amount of deprec iation $ 0.18 per mile b. As s uming that the 60 rental c ars are driv en a total of 1,770,000 miles during the c u...
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