Total Depreciation Essay Sample

August 1, 2017 General Studies

Howarth Manufacturing Company purchased a lathe on June 30. 2007. at a cost of $ 80. 000. The residuary value of the lathe was estimated to be $ 5. 000 at the terminal of a five-year life. The lathe was sold on March 31. 2011. for $ 17. 000. Howarth uses the straight-line depreciation method for all of its works and equipment. Partial-year depreciation is calculated based on the figure of months the plus is in service. Fix the journal entry to enter the sale. Assuming the company’s twelvemonth terminal is March 31.

Depreciation for 2007-08: ( ( 80000-5000 ) /5 ) X 9/12 = 11250
Depreciation for 2008-09: ( ( 80000-5000 ) /5 ) = 15000
Depreciation for 2009-10: ( ( 80000-5000 ) /5 ) = 15000
Depreciation for 2010-11: ( ( 80000-5000 ) /5 ) = 15000
Entire Depreciation46250



Transporting Value on day of the month of sale. ie March 31. 2011 = 80000-46250 =33750 Loss on sale is 33750 – 17000 = 16750
Journal Entry:
Cash Debit17000
Loss on Sale of MachineDebit16750
Accumulated DepreciationDebit46250
MachineCredit80000




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20. Carnellian sold a piece of equipment for Rs. 30. 000 on July 1. 2003. The equipment was purchased January 1. 2000 with an original cost of Rs. 50. 000 and a 10 twelvemonth life. Prepare journal entry for the above dealing presuming that the company calculates depreciation utilizing the dual worsening method of depreciation.

Assuming the company’s twelvemonth terminal is March 31:

Depreciation for 2000-01 for three months:50000/10 X 3/12 = 1250 Depreciation for 2001-02 for full year:5000
Depreciation for 2002-03 for full year:5000
Depreciation for 2003-04 for four months: 50000/10 X 3/12 =1250 Total Depreciation =12500
Transporting Value on day of the month of sale: 50000 – 12500 =37500
Loss on sale of equipment 37500 – 30000 =7500
Journal Entry
Cash Debit30000
Loss on Sale of EquipmentDebit7500
Accumulated DepreciationDebit12500
EquipmentCredit50000








21. WD Mining Company purchased a subdivision of land for $ 600. 000 in 2000 to develop a Zn mine. The mine began runing in 2002. At that clip. direction estimated that the mine would bring forth 200. 000 dozenss of quality ore. A sum of 100. 000 dozenss of ore was mined and processed from 2002 through December 31. 2009. During January 2010. a really promising vena was discovered. The revised estimation of ore still to be mined was 250. 000 dozenss. Estimated salvage value for the mine land was $ 100. 000 in both 2002 and 2010. Assuming that 10. 000 dozenss of ore was mined in 2010. calculate the sum of depletion to record in 2010.

Original Cost600000
Depreciation boulder clay 2009 = ( 600000-100000 ) Ten ( 100000/200000 ) 250000 Transporting Value on January 1. 2010350000
Depreciation for 2010 = ( 350000-100000 ) X 10000/250000 =10000

25. A truck was acquired on July 1. 2008. at a cost of $ 216. 000. The truck had a six-year utile life and an estimated salvage value of $ 24. 000. The straight-line method of depreciation was used. On January 1. 2011. the truck was overhauled at a cost of $ 20. 000. which extended the utile life of the truck for an extra two old ages beyond that originally estimated ( salvage value is still estimated at $ 24. 000 ) . In calculating depreciation for one-year accommodation intents. disbursal is calculated for each month the plus is owned. Fix the appropriate entries for January 1. 2011 and December 31. 2011.

Assuming the company’s twelvemonth terminal is December 31. 2011.

Original Cost216000
Depreciation for 2008 for 6 months= ( 216000-24000 ) /6 X 6/12=16000 Depreciation for 2009for full twelvemonth = ( 216000-24000 ) /6=32000 Depreciation for 2010for full twelvemonth = ( 216000-24000 ) /6=32000 Entire depreciation80000

Transporting Value on Jan 1. 2011=216000-80000136000
Subsequent add-on to Original Cost20000
Entire Original Cost156000
Staying Useful life=4. 5 old ages
Depreciation for 2011 for full twelvemonth = ( 156000-24000 ) /4. 5 =29333



TruckDebit20000
CashCredit20000

DepreciationDebit29333
Accumulated DepreciationCredit29333

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