Patterson Planning Corp. You have been hired by Patterson Planning Corp., an events planning company that recently had a fire in which some of the accounting records were damaged. In reviewing the fixed asset records, you find three depreciation schedules that are not labeled. They are listed in the following table. One of the assets has a depreciation rate of $4.50 per hour. Year Schedule A Schedule B Schedule C 1 $12,000.00 7,200.00 4,320.00 2,592.00 888.00 $10,125.00 13,500.00 13,500.00 13,500.00 3,375.00 $9,450.00 6,750.00 7,650.00 6,750.00 4,500.00 5 7,200.00 4,950.00 Total $27,000.00 $54,000.00 $47,250.00 Depreciation 1. Determine which depreciation method is shown in each schedule on the Patterson Planning Corp. panel. Then match each schedule to the asset description that best characterizes the type of assets often depreciated using that method. Asset Description Depreciation Schedule Used Asset generating greater revenues in the early years Asset producing steady revenues Asset with variable in-service time 2. For each of the depreciation schedules shown on the Patterson Planning Corp. panel, fill in the following information. Leave any cells blank that cannot be determined from the depreciation schedule. Useful life Residual value Asset cost Total operating hours Final Questions Review the depreciation schedules on the Patterson Planning Corp. panel, then answer the following questions. 1. How would you adjust Schedule B if, at the beginning of Year 3, the asset was estimated to have 5 more years of life remaining, but with a residual value that was $2,500 lower? The total depreciation for this asset now will be $ The depreciation amount for Year 3 will be $ 2. What is the difference between the journal entries for discarding or selling a fixed asset? a sale will involve a gain The journal entry to differs from the other entry because there is no receipt of cash sell a fixed asset discarded it is no longer useful the asset will be fully depreciated sold discard a fixed asset it has residual value disposal will involve a loss kept in the ledger it has not been removed from service the book value will not be zero 3. Complete the following sentences about depreciation. removed from the accounts it is replaced by a newer model (A) When a fixed asset is fully depreciated it is . (B) The balance of the Accumulated Depreciation account represents . (C) Depreciation measures money set aside for asset replacement the transfer of the cost of a fixed asset to expense the equivalent of lease payments on a fixed asset the gradual decrease in market value of a fixed asset the total amount that has been depreciated the expected service life of a fixed asset periodic recording of the cost of fixed assets as an expense the amount of wear and tear on a fixed asset during its useful life