ACCT 101 - Chapter 8 |. Fixed Assets long-term, relatively permanent assets, A. Cost of acquiring Depreciation A. Information needed a 2 3, The equipment was purchased on January 2, 2024 B, Methods of Depreciation 1. Straighttine Accumulated Book Depreciation Date Cost Depreciation Value Expense,2. Units-of-Production ‘Accumulated Book Depreciation Date Cost Depreciation Value Expense 3. Dectining Balance €, Double-Declining Balance BVat the end of the ‘Accumulated Book Depreciation Cost previous year__ Depreciation Value Expense4. Partial year depreciation — when an asset is purchased at a time other than the beginning of the year, the depreciation expense in the year the asset is acquired must be pro-rated for only those months that the assets was owned and used. ‘Assume the same facts as above, however, the equipment was purchased on May 31, 2024. ‘Straight Line - Double Declining Balance - Revised depreciation — when calculating depreciation, the useful lfe and the residual value are both estimates, During the life ofthe asset either of these ‘amounts can be changed if a more accurate estimate is determined, When an estimate is changed, only the future depreciation expense will be ‘effected; do not recalculate prior year depreciation expense, ‘Assume that forthe truck purchased above was being depreciated using Straight line depreciation, At the end of the second year of use the remaining Useful life was increased by 3 years, Capital vs. Revenue Expenditures 1. Revenue Expenditures 2. Capital Expenditures a. Betterment b. Extraordinary repairv. Disposal of Fixed Assets, A. Discarding B. Selling 1. Lossvw vil. 2. Gain Natural Resources A Depletion Intangible Assets ‘A. Amortization Patents Copyrights Franchises and Licenses ‘Trademarks or Trade Names Goodwill Other ommooeserisbe weuuoy08 way shoe + ‘98n 10} BuLkPoy » (Gupina spUODeH « Bujjona| pue BuIperp « Bupsixe jo eseyoind) Buy eBenres Aue ss9j ‘S6uIpIING 98n 10} BuIKPOY © (Gujpying Gunso jo eseysund) syjedey « pawvemun BuAoUe: 10 BUZEY » aay eeeeet (emer eyeyse joes wenbuled + YSU UL OY GOUEITEU] Bulpying ety punoue pue 07 SABALIEN « 00} Buxenung « (uowanbe 00 on. etn jo asnyzind) BuUoRIPUODDY « suojssiunuoo 50,019 + _(Wueusdinbe pesn jo eseygund) suedou « uojonnsuo sejouebe yueUuseA08 wos Sued vores » S6uunp peuinour 800 aOuRINS S. ‘uraua's 5004 s120U1613 « oud eseuoind + ‘soxe} sojeg S99} ,s1oBNNDLY « | duamdynb3-g-Asoujyoey pete D |Fixed Asset Transactions 1. Equipment acquired on January 3, 2020, at a cost of $360,000, has an estimated ‘useful life of 12 years, has an estimated residual value of $30,000, and is depreciated, by the straight-line method. ‘a. What is the book value of the equipment on December 31, 2020? . Assuming that the equipment was sold on April 1, 2024, for $220,000, $20,000 ccash and the rest in a note. Journalize the entries to record (1) the depreciation to April 1, 2024, and (2) the sale of the equipment. 2. Equipment acquired on May 30, 2020, at a cost of $147,484, has an estimated ‘useful ife of eight years and an estimated residual value of $17,500. The equipment is being depreciated using the straight-line method. ‘a. What is the book value of the equipment on December 31, 2024? Bb, Assuming the equipment was sold on January 2, 2025, for $85,000, journalize the entry to record the sale ‘e. Assuming the equipment was sold on August 2, 2025, for $92,000, $12,000 was paid in cash and a note was accepted for the balance. Journalize the entry.3. Assume the same facts as in #2 above, but instead of selling the asset, on January 2, 2025, the useful life was increased by 2 years and the residual value was decreased to $8,000. What is the new annual depreciation expense? 4, Assume the same facts as in #1 above, What is the depreciation expense for the first 3 years using the double declining balance method? 5. Assuming the same facts as #1 above. The total useful life of is estimated to be 1,200,000 units, what is the depreciation expense using units of production if the actual units used are: 2020 - 89,000 units; 2021 - 103,600 units; 2022 - 100,250 units,