On July 1, 2019, Friedman Inc. invested $720,000 In a mine estimated to have 900,000 tons of ore of uniform grade. During the last 6 months of 2019, 100,000 tons of are ore were mined.
Instructions
- Prepare the journal entry to record depletion.
- Assume that the 100,000 tons of ore were mined, but only 80,000 units were sold. How are the costs applicable to the 20,000 unsold units reported?
Read more: Problem-20: Plant Assets, Natural Resources and intangible Assets
Yello Bus lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2019, at a cost of $148,000. Over its 4-year useful life, the bus in expected to be driven 100,000 miles. Salvage value is expected to be $8,000.
Instructions
- Compute the depreciable cost per unit
- Prepare a depreciation schedule assuming actual mileage was 2019: 26,000; 2020: 32,000; 2021: 25,000; and 2022: 17,000.
Read more: Problem-14: Plant Assets, Natural Resources and intangible Assets
Rottino Company purchased a new machine on October 1, 2019, at a cost of $150,000. The company estimated that the machine will have a salvage value of $12,000. The machine is expected to be used for 10,000 working hours during its 5-year indicated.
Instructions
Compute the depreciation expense under the following methods for the year indicated
- Straight-line for 2019
- Units-of-activity for 2019, assuming machine usage was 1,700 hours.
- Delining-blance using double the straight-line rate for 2019 and 2020
Read more: Problem-15: Plant Assets, Natural Resources and intangible Assets
Linton Company purchased a delivery truck for $34,000 on January 1, 2019. The truck has an expected salvage value of $2,000, and s expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2019 and 12,000 in 2020.
Instructions
- Compute depreciation expense for 2019 and 2020 using
- the straight-line method,
- the units-of-activity method, and
- the double-decline-balance method.
- Assume that Linton uses the straight-line method.
- Prepare the journal entry to record 2019 depreciation.
- Show how the truck would be reported in the December 31, 2019, blance sheet.
Read more: Problem-16: Plant Assets, Natural Resources and intangible Assets
Terry Wade, the new controller of Hellickson Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2019. His findings as as follows
Instructions
- Compute the revised annual depreciation on each asset in 2019. (Show computations
- Prepare the entry (or entries) to record depreciation on the building in 2019.
Read more: Problem-17: Plant Assets, Natural Resources and intangible Assets
Presented below are selected transactions at Ridge Company for 2019.
| Jan. 1 | Retired a piece of machinery that was purchased on January 1, 2009. The machine cost $62,000 on that date. It had a useful life of 10 years with no salvage value. |
| June 30 | Sold a computer that was purchased on January 1, 2016. The computer cost $45,000. It had a useful life of 5 years with no salvage value. The computer was sold for $14,000. |
| Dec. 31 | Discarded a delivery truck that was purchased on January 1, 2015. The truck cost $33,000. It was depreciated based on a 6-year useful life with a $3,000 salvage value. |
Instructions
Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of. Ridge Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2018.)
Read more: Problem-18: Plant Assets, Natural Resources and intangible Assets
Pryce Company owns equipment that cost $65,000 when purchased on January 1, 2016. It ha been depreciated using the straight-line method based on estimated salvage value of $5,000 and an estimated useful life of 5 years.
Instructions
Prepare Pryce Company's journal entries to record the sale of the equipment in these four independent situations.
- Sold for $31,000 on January 1, 2019.
- Sold for $31,000 on May 1, 2019.
- Sold for $11,000 on January 1, 2019.
- Sold for $11,000 on October 1, 2019.
Read more: Problem-19: Plant Assets, Natural Resources and intangible Assets
During 2019, Paola Corporation reported net sales of $3,500,000 and net income of $1,500,000. Its balance sheet reported average total assets of $1,400,000.
Instructions
Calculate the asset turnover.
Read more: Problem-23: Plant Assets, Natural Resources and intangible Assets
Rizzo's Delivery Company and Overland's Express Delivery exchanged delivery trucks on January 1, 2019. Rizzo's truck cost $22,000. It has accumulated depreciation of $15,000 and a fair value of $3,000. Overland's truck cost of $10,000. It has accumulated depreciation of $8,000 and a fair value of $3,000. The transaction has commercial substance.
Instructions
- Prepare the entry to record the exchange of assets by Mercy Co.
- Journalize the exchange for Overland's Express Delivery.
Read more: Problem-25: Plant Assets, Natural Resources and intangible Assets
Presented below are two independent transactions. Both transactions have commercial substance.
- Mercy Co. exchanged old trucks (cost $64,000 less $22,000 accumulated depreciation) plus cash of $17,000 for new trucks. The old trucks had a fair value of $38,000.
- Pence Inc. trandes its used machine (cost $12,000 less $4,000 accumulated depreciation) for a new machine. In addition to exchanging the old machine (which had a fair value of $11,000),, Pence also paid cash of $3,000
Instructions
- Prepare the entry to record the exchange of assets by Mercy Co.
- Prepare the entry to record the exchange of assets by Pence Inc.
Read more: Problem-24: Plant Assets, Natural Resources and intangible Assets