Chapter 9 Fixed Assets and Intangible Assets
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EX 9-11 Depreciation by units-of-output method
OBJ. 2
Prior to adjustment at the end of the year, the balance in Trucks is 296,900 and the balance in Accumulated Depreciation—Trucks is 99,740. Details of the subsidiary ledger
are as follows:
Truck no.
Cost Estimated
Residual Value
Estimated Useful
life Accumulated
Depreciation
at Beginning of Year
Miles Operated
During Year
1 80,000
15,000 250,000 miles
— 21,000 miles
2 54,000
6,000 300,000
14,400 33,500
3 72,900
10,900 200,000
60,140 8,000
4 90,000
22,800 240,000
25,200 22,500
a. Determine the depreciation rates per mile and the amount to be credited to the accu- mulated depreciation section of each of the subsidiary accounts for the miles operated
during the current year. b. Journalize the entry to record depreciation for the year.
EX 9-12 Depreciation by two methods
OBJ. 2
A Kubota tractor acquired on January 6 at a cost of 90,000 has an estimated useful life of 20 years. Assuming that it will have no residual value, determine the depreciation
for each of the first two years a by the straight-line method and b by the double- declining-balance method.
EX 9-13 Depreciation by two methods
OBJ. 2
A storage tank acquired at the beginning of the fiscal year at a cost of 240,000 has an estimated residual value of 30,000 and an estimated useful life of 25 years. Determine
the following: a the amount of annual depreciation by the straight-line method and b the amount of depreciation for the first and second years computed by the double-
declining-balance method.
EX 9-14 Partial-year depreciation
OBJ. 2
Sandblasting equipment acquired at a cost of 36,000 has an estimated residual value of 6,000 and an estimated useful life of 10 years. It was placed into service on April 1 of
the current fiscal year, which ends on December 31. Determine the depreciation for the current fiscal year and for the following fiscal year by a the straight-line method and
b the double-declining-balance method.
EX 9-15 Revision of depreciation
OBJ. 2
A building with a cost of 780,000 has an estimated residual value of 90,000, has an estimated useful life of 40 years, and is depreciated by the straight-line method. a What
is the amount of the annual depreciation? b What is the book value at the end of the twenty-fourth year of use? c If at the start of the twenty-fifth year it is estimated that
the remaining life is 10 years and that the residual value is 70,000, what is the depre- ciation expense for each of the remaining 10 years?
EX 9-16 Capital expenditure and depreciation
OBJ. 1, 2
Willow Creek Company purchased and installed carpet in its new general offices on April 30 for a total cost of 18,000. The carpet is estimated to have a 15-year useful life
and no residual value. a. Prepare the journal entry necessary for recording the purchase of the new carpet.
b. Record the December 31 adjusting entry for the partial-year depreciation expense for
the carpet, assuming that Willow Creek Company uses the straight-line method.
a. Truck 1, credit to Accumulated
Depreciation, 5,460
a. 4,500
a. 8,400
a. First year, 2,250
a. 17,250
b. Depreciation Expense, 800
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Chapter 9 Fixed Assets and Intangible Assets
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