Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Ch 9 Long Lived Tangible and intangible Assets Team Project Handout 9-1 Joel Harvey Florists acquired a truck on January 1, Year 1. The company
Ch 9 Long Lived Tangible and intangible Assets Team Project Handout 9-1 Joel Harvey Florists acquired a truck on January 1, Year 1. The company paid $11,000 for the truck, $500 for destination charges, and $250 to paint the company name on the side of the truck. The company's accounting manager estimates the truck to have a five-year useful life and a residual value of $1,750. The truck is expected to be driven 100,000 miles in five years. It is actually driven 15,000 miles in Year 1, 25,000 miles in Year 2,30,000 miles in Year 3, 25,000 miles in Year 4 and 5,000 miles in Year 5. 1 2 Part 1 3 on January 1, Year 1, how much should Joel Harvey Florists capitalize for the cost of the truck? 4 11,000 +500 +250 = $11,750 5 6 7 Part 2 8 How much depreciation expenses would be recorded for the years Year 1 through Year 5 using each of the following methods? 1 Depreciation Template amounts on template put in just to make sure template is working Purchase price $ 27,000 #units used 4 Resid value $ 1,500 1 61,200 5 Useful life 3 lyr 2 140,250 #units produced 255,000 3 53,550 7 4 B 5 i Straight Line (Cost-Residual Value) x (1/useful life)x (#months/12 for first year only) 2 year Depreciatic Acc Depre Book Value 1 $ 8,500 8500 $ 18,500 4 2 $ 8,500 17000 $ 10,000 5 3 $ 8,500 25500 $ 1,500 6 4 $ 8,500 34000 $ (7,000) 7 5 $ 8,500 42500 $ (15,500) B 6 7 Units of Production (Cost - Residual Value) Actual production this period/estimated total production) year Depreciatic Acc Depre Book Value 1 $ 6,120 6120 $ 20,880 2 $ 14,025 20145 $ 6,855 3 $ 5,355 25500 $ 1,500 4 $ 25500 $ 1,500 5 $ 25500 $ 1,500 6 7 Double Declining Method (Cost - Accumulated Depreciation) x (2/Useful Life) x (# months/12 for first year only) year Depreciatic Acc Depre Book Value 1 $ 18,000 18000 $ 9,000 2 $ 6,000 24000 $ 3,000 3 $ 2,000 26000 $ 1,000 **Do not depreciate below the residual value 4 $ 667 26666.67 $ 333 5 s 26888.89 $ 111 6 7 222 Part 3 On December 31, Year 5, at the end of its useful life, Joel Harvey sold the truck for $3,000 cash. Compute the gain or loss on sale
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started