Recording Entries Using Composite Depreciation Method

California Utilities owns a power plant that consists of the following assets, all acquired on January 1, 2020.

	Cost	Estimated Residual Value	Estimated Life (Years)
Building	$480,000	$16,000	30
Machinery	152,000	0	10
Other equipment	80,000	8,000	6

a. Compute the total straight-line depreciation for 2020 on all items combined.

Total depreciation expense for 2020

Answer

b. Compute the composite depreciation rate (based on cost) and the composite life of the plant.

Note: Round both amounts to two decimals.

Composite depreciation rate	Answer
Composite life	Answer

c. Provide the entry to record 2020 composite depreciation.

Date	Account Name	Dr.	Cr.
Dec. 31, 2020	AnswerCashInventoryPropertyBuildingOther EquipmentAccumulated DepreciationCost of Oil ReserveRetained EarningsPrior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer
	AnswerCashInventoryPropertyBuildingOther EquipmentAccumulated DepreciationCost of Oil ReserveRetained EarningsPrior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer

d. Assume that all of the Other equipment was sold in 2023 for $9,600 cash. Prepare the entry for the sale of that equipment.

Date	Account Name	Dr.	Cr.
Dec. 31, 2023	Cash	Answer	Answer
	AnswerCashInventoryPropertyBuildingOther EquipmentAccumulated DepreciationCost of Oil ReserveRetained EarningsPrior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer
	AnswerCashInventoryPropertyBuildingOther EquipmentAccumulated DepreciationCost of Oil ReserveRetained EarningsPrior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer

Please answer all parts of the question.

PreviousSave AnswersNext