Hi there,
I am currently stuck on calculating unit depreciation, specifically on how the outputted answers give the revised cost under Journal entry 4. If you could please clarify how they got this, that would be awesome.
Thank you.
(See below photos)
Hi
The question was: Benson Inc. was preparing the annual financial statements and, as part of the year-end procedures, assessed the assets and prepared the following alphabetized schedule based on adjusted values at December 31, 2015: Date of Deprec. Residual Accum. Recoverable Asset Purchase Method* Cost Value Useful Life Deprec. Amount Equipment Oct. 1/10 Units $52,000 $3,000 7,000 units $17,500 $12,000 Furniture Oct. 27/10 DDB 13,000 4,000 10 yrs 8,882 8,000 Land Jan. 2/10 N/A 90,000 N/A N/A N/A 110,000 Office building Feb. 3/10 SL 103,400 17,000 16 yrs 31,950 73,000 Warehouse Apr. 1/10 SL 162,200 11,000 21 yrs 41,400 122,000 "DDB = Double-declining balance; SL = Straight-line; Units = Units-of-production; N/A = Not applicable Your solution was: a) Record any impairment losses at December 31, 2015. Assume Benson Inc. has recorded no impairment losses in previous years. General Journal Page GJ1 Effect On Date Account/Explanation F |Debit Credit Balance Sheet 31/Dec Impairment Loss 3,400 -Equity Office Building 3,400 -Assets Marking: 'Impairment Loss' should be debited for the amount of $22,500, but you have not done this. This will cost you 1 mark. You have not included the 'Equipment' account in this journal entry. This will cost you 2 marks. 'Office Building' should not have been included in this journal entry. Any amounts and balance sheet effect entered for this account will not be evaluated. You have not entered a description for this transaction. However you will not lose any marks for this. $52,000 - $17,500 - $12,000 = $22,500Journal Entry 4 : 'To record revised depreciation on equipment' 'Depreciation Expense, Equipment' should be debited for the amount of $4,000, but you have not done this. This will cost you 1 mark. 'Aocumulated Depreciation. Equipment' should be credited for the amount of $4,000. but you have not done this. This will cost you 1 mark. You have not entered a description for this transaction. However you will not lose any marks for this. Depreciation per unit = $52,000 - $3300 7,000 units . _ $17,500 _ . Units produced $7 per unit 2,500 units Remaining units = 7.000 - 2,500 = 4,500 = 5? per unit Revised cost = $52,000 - $22,500 = $29,500 Revised book value = $29,500 - $17,500 = $12,000 . . . . _ $12,000 - $3.000 _ . Revlsed deprecratlon per unlt 4'500 units $2 per unit Revised depreciation = $2 per unit x 2,000 = $4,000
