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Kawasaki Ltd. shows the following entries in its Equipment account for 2023. All amounts (in yen, in

Question:

Kawasaki Ltd. shows the following entries in its Equipment account for 2023. All amounts (in yen, in thousands) are based on historical cost.


Instructions

a. Prepare any correcting entries necessary.

b. Assuming that depreciation is to be charged for a full year on the ending balance in the asset account, compute the proper depreciation charge for 2023 under each of the methods listed below. 

Assume an estimated life of 10 years, with no residual value. The machinery included in the January 1, 2023, balance was purchased in 2021. 

1. Straight-line.

2. Sum-of-the-years’-digits.

Transcribed Image Text:

Equipment June Cost of equipment sold |(purchased prior to 2023) Balance Jan. 1 133,000 30 Aug. Purchases 10 32,000 Freight on equipment 12 purchased 700 23,000 25 Installation costs 2,500 Nov. Repairs 10 500

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aPrepare Correcting journal entry Date Account title and explanation Debit Credit Repair ex...View the full answer


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Francis Sikazwe
Hello, This is Dr.Lucky Varshney. I have completed my B. Com, M.Com and P.hd degree in Commerce. I am expert in Accountancy and Business Studies. I always stood first position in my class. I have 5 years online and offline tecahing experience.
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Related Video

Depreciation of non-current assets is the process of allocating the cost of the asset over its useful life. The cost of the asset includes the purchase price, any additional costs incurred to bring the asset to its current condition and location, and any other costs that are directly attributable to the asset. The useful life of the asset is the period over which the asset is expected to be used by the company. To calculate the depreciation, companies use different methods such as straight-line, declining-balance, sum-of-the-years\'-digits, units-of-production, and group depreciation. The chosen method will depend on the type of asset, the company\'s accounting policies, and the accounting standards that are applicable. The straight-line method allocates an equal amount of the asset\'s cost over its useful life, while the declining-balance method calculates depreciation at a fixed rate, typically double the straight-line rate, but the amount of depreciation decreases over time. The sum-of-the-years\'-digits method is similar to the declining-balance method, but the rate of depreciation is calculated using a fraction that is based on the useful life of the asset. It\'s important to note that the depreciation expense will be recorded on the company\'s income statement and the accumulated depreciation will be recorded on the company\'s balance sheet. This will decrease the value of the asset on the balance sheet over time.

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