Please do not give image format On April 22, 2023, Pharoah Enterprises purchased equipment for $134,860. The company expects to use the equipment for 11,800 working hours during its four-year life and that it will have a residualvalue of $14,500. Pharoah has a December 31 year end and pro-rates depreciation to the nearest month. The actual machine usage was: 2,000 hours in 2023; 2,500 hours in 2024; 3,900 hours in 2025;2,500 hours in 2026; and 1,100 hours in 2027.(a2)Prepare a depreciation schedule for the life of the asset under the double diminishing-balance method. (Round partial-period depreciation rate to 4 decimal palces, e.g. 15.2563 % and other answers to Odecimal places, e.g. 5,276.)Year2023202420252026$Carrying AmountBeginning of Year134,860Depr.Rate50 %50 %50 %50 %$Depr.Expense$Accum.Depr.End of YearCarryingAmount

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Description: Please do not give image format On April 22, 2023, Pharoah Enterprises purchased equipment for $134,860. The company expects to use the equipment for 11,800 working hours during its four-year life and that it will have a residualvalue of $14,500. Pha

The Depreciation expense is charged on fixed assets as reduction in the value of the fixed assets…

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On April 22, 2023, Pharoah Enterprises purchased equipment for $134,860. The company expects to use the equipment for 11,800 working hours during its four-year life and that it will have a residu value of $14,500. Pharoah has a December 31 year end and pro-rates depreciation to the nearest month. The actual machine usage was: 2,000 hours in 2023; 2,500 hours in 2024; 3,900 hours in 202 2,500 hours in 2026; and 1,100 hours in 2027. (a2) Prepare a depreciation schedule for the life of the asset under the double diminishing-balance method. (Round partial-period depreciation rate to 4 decimal palces, e.g. 15.2563% and other answers to O decimal places, e.g. 5,276.) Year 2023 2024 2025 2026 $ Carrying Amount Beginning of Year 134,860 Depr. Rate 50 % 50 % 50 % 50 % $ Depr. Expense Accum. Depr. End of Year Carrying Amount

On April 22, 2023, Pharoah Enterprises purchased equipment for $134,860. The company expects to use the equipment for 11,800 working hours during its four-year life and that it will have a residu value of $14,500. Pharoah has a December 31 year end and pro-rates depreciation to the nearest month. The actual machine usage was: 2,000 hours in 2023; 2,500 hours in 2024; 3,900 hours in 202 2,500 hours in 2026; and 1,100 hours in 2027. (a2) Prepare a depreciation schedule for the life of the asset under the double diminishing-balance method. (Round partial-period depreciation rate to 4 decimal palces, e.g. 15.2563% and other answers to O decimal places, e.g. 5,276.) Year 2023 2024 2025 2026 $ Carrying Amount Beginning of Year 134,860 Depr. Rate 50 % 50 % 50 % 50 % $ Depr. Expense Accum. Depr. End of Year Carrying Amount

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 11E: On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated...

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On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
Hathaway Company purchased a copying machine for 8,700 on October 1, 2019. The machines residual value was 500 and its expected service life was 5 years. Hathaway computes depreciation expense to the nearest whole month. Required: 1. Compute depredation expense (rounded to the nearest dollar) for 2019 and 2020 using the: a. straight-line method b. sum-of-the-years-digits method c. double-declining-balance method 2. Next Level Which method produces the highest book value at the end of 2020? 3. Next Level Which method produces the highest charge to income in 2020? 4. Next Level Over the life of the asset, which method produces the greatest amount of depreciation expense?
Utica Machinery Company purchases an asset for 1,200,000. After the machine has been used for 25,000 hours, the company expects to sell the asset for 150,000. What is the depreciation rate per hour based on activity?
For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a seventeen-year remaining legal life was purchased for $850,000. The patent will be usable for another six years. B. A patent was acquired on a new tablet. The cost of the patent itself was only $12,000, but the market value of the patent is $150,000. The company expects to be able to use this patent for all twenty years of its life.
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.
Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.
At the beginning of 2020, Holden Companys controller asked you to prepare correcting entries for the following three situations: 1. Machine X was purchased for 100,000 on January 1, 2015. Straight-line depreciation has been recorded for 5 years, and the Accumulated Depreciation account has a balance of 45,000. The estimated residual value remains at 10,000, but the service life is now estimated to be 1 year longer than originally estimated. 2. Machine Y was purchased for 40,000 on January 1, 2018. It had an estimated residual value of 4,000 and an estimated service life of 8 years. It has been depreciated under the sum-of-the-years-digits method for 2 years. Now, the company has decided to change to the straight-line method. 3. Machine Z was purchased for 80,000 on January 1, 2019. Double-declining-balance depreciation has been recorded for 1 year. The estimated residual value is 8,000 and the estimated service life is 5 years. The computation of the depreciation erroneously included the estimated residual value. Required: Prepare any necessary correcting journal entries for each situation. Also prepare the journal entry for each situation to record the depreciation for 2020. Ignore income taxes.
On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a ten-year remaining legal life was purchased for $300,000. The patent will be usable for another eight years. B. A patent was acquired on a new smartphone. The cost of the patent itself was only $24,000, but the market value of the patent is $600,000. The company expects to be able to use this patent for all twenty years of its life.
Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated life: 5 years Estimated residual value: 3,000 Depreciation method for financial statements: straight-line method Depreciation for income tax purposes: MACRS (3-year life) From 2019 through 2023, each year, Hunter had sales of 100,000, cost of goods sold of 60,000, and operating expenses (excluding depreciation) of 15,000. The truck was disposed of on December 31, 2023, for 2,000. Required: 1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2019 through 2023. 2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2019 through 2023. 3. Compare the total income for all 5 years under Requirements 1 and 2.
On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was estimated at 2,000. The equipment will be depreciated over 10 years using the double-declining balance method. Counting the year of acquisition as one-half year, Mundo should record 2019 depredation expense of: a. 7,680 b. 9,000 c. 9,600 d. 10,000
Urquhart Global purchases a building to house its administrative offices for $500,000. The best estimate of the salvage value at the time of purchase was $45,000, and it is expected to be used for forty years. Urquhart uses the straight-line depreciation method for all buildings. After ten years of recording depreciation, Urquhart determines that the building will be useful for a total of fifty years instead of forty. Calculate annual depreciation expense for the first ten years. Determine the depreciation expense for the final forty years of the assets life, and create the journal entry for year eleven.