Computing Depreciation and Recording Disposal Using Multiple Depreciation Conventions

Whitney Company purchased equipment on July 12, 2020, for $13,600. This equipment has an estimated useful life of five years and an estimated residual value of $1,600. The company depreciates this asset using the straight-line depreciation method.

Required

a. Compute depreciation using the following variations to the straight-line depreciation method.

1. Compute depreciation for 2020 using the exact date outstanding, commencing depreciation on July 13, 2020, and using 360 days as the allocation base.

Depreciation for 2020

Answer

2. Compute full year, annual depreciation for 2020 based on the balance in the equipment account at the beginning of the period.

Depreciation for 2020

Answer

3. Compute full year, annual depreciation for 2020 based on the balance in the equipment account at the end of the period.

Depreciation for 2020

Answer

4. Compute depreciation for 2020 assuming one-half of a year's depreciation in both the year of purchase and the year of retirement, regardless of the date of purchase or retirement.

Depreciation for 2020

Answer

5. Compute depreciation for 2020 assuming a full month of depreciation during the month of purchase and no depreciation in the month of disposal.

Depreciation for 2020

Answer

b. Assume that the asset was retired on January 1, 2023.

1. Prepare the entry for disposal of the asset assuming that the company used the exact date outstanding to calculate depreciation.

Date	Account Name	Dr.	Cr.
Jan. 1, 2023	Loss on Retirement Property	Answer	Answer
	Answer-Cash, Inventory, Property, Building, Equipment, Accumulated Depreciation, Cost of Oil Reserve, Retained EarningsPrior Period Adjustment, SalesCost of Goods Sold, Depreciation Expense, Exploration Expense, Repairs Expense, Gain on Reversal of Impairment Loss, Loss on Impairment, Loss on Disposal, N/A	Answer	Answer
	Answer-Cash, Inventory, Property, Building, Equipment, Accumulated Depreciation, Cost of Oil Reserve, Retained EarningsPrior Period Adjustment, SalesCost of Goods Sold, Depreciation Expense, Exploration Expense, Repairs Expense, Gain on Reversal of Impairment Loss, Loss on Impairment, Loss on Disposal, N/A	Answer	Answer

2. Prepare the entry for disposal of the asset assuming that the company used the full year (beginning of the period) depreciation method.

Date	Account Name	Dr.	Cr.
Jan. 1, 2023	Loss on Retirement Property	Answer	Answer
	Answer-Cash, Inventory, Property, Building, Equipment, Accumulated Depreciation, Cost of Oil Reserve, Retained EarningsPrior Period Adjustment, SalesCost of Goods Sold, Depreciation Expense, Exploration Expense, Repairs Expense, Gain on Reversal of Impairment Loss, Loss on Impairment, Loss on Disposal, N/A	Answer	Answer
	Answer-Cash, Inventory, Property, Building, Equipment, Accumulated Depreciation, Cost of Oil Reserve, Retained EarningsPrior Period Adjustment, SalesCost of Goods Sold, Depreciation Expense, Exploration Expense, Repairs Expense, Gain on Reversal of Impairment Loss, Loss on Impairment, Loss on Disposal, N/A	Answer	Answer