Accounting -HW Assignment 3 – Depreciation

January 30, 2017

Question
HW Assignment 3 – Depreciation

You MUST show all work in order to receive credit for the problems.

Problem 1

James Delivery Inc. purchased a truck on April 1, 2014 for \$45,000. The truck is expected to have a useful life of 5 years and a salvage value of \$3,000. They expect to drive the truck for 80,000 miles.

Required:

Calculate depreciation expense for all 5 years under each of the following methods:

Straight-line
Double-declining balance
Sum-of-the-years’ digits
Units of Activity assuming that the truck had the following actual miles:
2014 – 15,000 miles

2015 – 18,000 miles

2016 – 20,000 miles

2017 – 22,000 miles

2018 – 9,000 miles

Problem 2

Expo Inc. purchased a machine on January 1, 2013 for \$300,000. They estimated the useful life to be 6 years. They estimated a salvage value of \$20,000 and have been using the sum-of-the year’s digits method of depreciation.

In 2015 they changed depreciation methods from sum-of-the year’s digits to straight-line.

Required:

What is the journal entry to correct the depreciation expense in 2013 and 2014?
Prepare the journal entry to record the depreciation in 2015.
Problem 3

Machinery purchased for \$52,000 by Carver Co. on January 1, 2010 was originally estimated to have a life of 8 years with a salvage value of \$4,000 at the end of that time. Depreciation has been entered for 5 years on this basis.

In 2015, it is determined that the total estimated life should be 10 years with a salvage value of \$4,500 at the end of that time. Assume straight-line depreciation.

Required:

1. Prepare the entry to correct the prior years’ depreciation, if necessary.

2. Prepare the entry to record depreciation for 2015.

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