Exercise 18.7
will heseno cery and in 2002 Recording the sale of plant and equipment Pro Comune che con 12.000 Depreciation wing. halosen on the truck up to four who was for I. Ghe thermal cry forced the 2. Auame, decal that the makis 3:20. Give the journal erary recorded Recording asset tradision. Exercise 18.7 Objective 184 Property. Plant, and Equipment CHAPTER 18 651 Exercise 18.3 Objective 18-2 Exercise 18.4 Objective 18-2 Exercise 18.5 Objective 18-2 Exercise 18.6 Objective 18-3 Recording depreciation. For the year ending December 31, 20X1. Peterson Manufacturing Company had depreciation totaling $12,000 on its office equipment. Give the general journal entry to record the adjusting entry Computing depreciation under various methods. Atkins Company acquired an asset on January 2, 20X1, a cost of $142.000. The asset's useful life is four years and its salvage value is $32,000. Compute the depreciation expense for each of the first two years, using the straight-line method, the double-declining-balance method, and the sum-of-the-years-digits method. Computing depreciation under the units-of-production method. On January 12, 20X1, Harris Company purchased a machine to mold components for one of its products. Total cost of the machine was $480,000. It is expected to produce 450,000 units and to have a salvage value of $30,000. The company used the units-of-production method of depreciation a. In 20X1. it produced 52,000 units. Compute the depreciation expense for 20X1. b. During 20X2,60,000 units were produced. Compute the depreciation expense for 20x2. Applying Modified Accelerated Cost Recovery System (MACRS) under federal income tax rules. On January 20, 20X1. Starksville Transport Company purchased a new lightweight truck for $90,000 1. Into which MACRS"class" is this asset classified? 2. What would be the amount of cost recovery on the truck in 20X1 and in 20X2 Recording the sale of plant and equument. Paxton Company owns a track that cost $112.000. Depreciation totaling $76,000 had been taken on the truck up to January 8, 20X1. when it was sold for $34,300 1. Give the journal entry to record the sale. 2. Assume, instead, that the truck is sold for $38,200, Give the journal entry to record the sale. Recording asset trade-ins using financial accounting rules. At the beginning of the year four years ago. Cedar Valley Company purchased construction equipment for $715,000, with a useful life of six years and estimated salvage value of $100,000. The company uses the straight-line method of depreciation. On July 3, 20x1, this equipment was traded for new similar construction equipment that has a value of $800,000. The company paid $582,000 cash and was given a trade-in allowance of $218.000 for the old equipment. 1. Give the general journal entry needed on July 3, 20X1, to record the trade-in. (Assume that the entry to bring depreciation up to date has been made.) 2. Assume the same facts as stated above, except that Cedar Valley paid cash of $314.750 on the trade-in and was given an allowance of $285,250 for the old equipment. Give the journal entry to record the trade in. Reporting asset trade-Ins using federal income tax requirements. (Refer to the truck purchased by Starksville Transport Company, Exercise 18.6.) At the beginning of the year, it became obvious that the truck purchased the year before was too small to handle many of Starksville's jobs. On January 2, 20X2, Starksville traded in the old truck on a new larger lightweight truck. Its sale price (and fair market value) was $120,000. The dealer gave Starksville a trade-in allowance of 560,000 for the old truck and Surksville paid the balance of $60,000 in cash 1. For tax purposes, how much gain or loss is recognized on the trade-in? 2. For tax purposes, what is the basis (the cost) to be recorded for the new truck? Exercise 18.7 Objective 18-4 Exercise 18.8 Objective 18-5 Exercise 18.9 Objective 18-5
