Daltry Company has a December 31 year-end.

Part a) Daltry purchased the following assets on January 1, Year 1:

1. Purchased equipment for $84,000. This equipment is expected to be in service for 5 years, and the residual value of $24,000. Daltry will depreciate this equipment using the double declining balance method.

2. Purchased a building for $460,000. It will be depreciated over 20 years using the straight-line method and have a residual value of $160,000.

3. Purchased an ocean-going tugboat for $850,000. It is expected to provide 100,000 hours of service over its useful life and have a residual value of $120,000. It will be depreciated using the units of production method. In Year 1 it was used for 4,380 hours.

Instructions:

Prepare the three December 31 adjusting journal entries for these assets.

Part b) Partial year depreciation:

For partial year depreciation, Daltry rounds to the nearest month, except for items using units of production. Assume that instead of purchasing these assets on January 1, they were purchased as follows:

• Equipment: March 18

  Building: September 10

  Tug boat: October 22: From date of purchase to year end it was used 910 hours. In year 2 the tugboat was used 3,900 hours.

Instructions:

Prepare the three December 31 adjusting journal entries for these assets for both Year 1 and Year 2. Do all three Year 1 entries and then the Year 2 entries.

Remember to use standard journal entry format.