Question
On March 31, 2013, the Herzog Company purchased a factory complete with machinery and equipment. The allocation of the total purchase price of $1,050,000 to
On March 31, 2013, the Herzog Company purchased a factory complete with machinery and equipment. The allocation of the total purchase price of $1,050,000 to the various types of assets along with estimated useful lives and residual values are as follows: Asset Cost Estimated Residual Value Estimated Useful Life in Years Land $ 125,000 N/A N/A Building 550,000 none 20 Machinery 190,000 12% of cost 8 Equipment 185,000 $ 13,000 4 Total $ 1,050,000 On June 29, 2014, machinery included in the March 31, 2013, purchase that cost $105,000 was sold for $85,000. Herzog uses the straight-line depreciation method for buildings and machinery and the sum-of-the-years'-digits method for equipment. Partial-year depreciation is calculated based on the number of months an asset is in service.
Required:
1. Compute depreciation expense on the building, machinery, and equipment for 2013. (Do not round intermediate calculations.)
2. Prepare the journal entry to record the depreciation on the machinery sold on June 29, 2014, and the sale of machinery. (If no entry is required for a transaction, select "No journal entry required" in the first account field.)
3. Compute depreciation expense on the building, remaining machinery, and equipment for 2014. (Do not round intermediate calculations.)
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