Valix Finacc vol 1 Problem 16-19

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 16 Problem 16-19

1. Accumulated depreciation                                                            400,000                    

    Loss on retirement of building                                                     1,600,000                    

            Building                                                                                                        2,000,000

    Building                                                                                        2,500,000

            Cash                                                                                                            2,500,000

    Depreciation (8,100,000 / 20)                                                          405,000

            Accumulated depreciation                                                                           405,000

    Building (9,000,000 + 2,500,000 – 2,000,000)                                                          9,500,000 

    Accumulated depreciation (1,800,000 – 400,000)                                                1,400,000

    Book value                                                                                                          8,100,000

2. Accumulated depreciation (1,960,000 x 20%)                                 392,000

    Loss on retirement of building                                                     1,568,000

            Building (2,500,000 x .784)                                                                            1,960,000

    Building                                                                                        2,500,000

            Cash                                                                                                            2,500,000

           

    Depreciation (8,132,000 / 20)                                                          406,600

            Accumulated depreciation                                                                           406,600

    Building (9,000,000 – 1,960,000 + 2,500,000)                                                          9,540,000

    Accumulated depreciation (1,800,000 – 392,000)                                                1,408,000

    Book value                                                                                                          8,132,000

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    6. Depreciation – tools                                                                      10,000

               Tools (90,000 / 3 x 4/12)                                                                                  10,000

                                                                                                                                                        

    7. Machinery                                                                                    128,600

               Accumulated depreciation                                                             40,000

               Depreciation – machinery                                                                             88,600

        Depreciation recorded                                                                                      128,600

        Correct depreciation (1,200,000 / 10 x 4/12)                                                        40,000

        Overdepreciation                                                                                                 88,600