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ACC 281 E 10 -7 8 9 Straight Line Method

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Accounting

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ACC 281 E 10 -7 8 9 Straight Line Method
E10-7
Cost - Salvage Value = Depreciated cost
$30,000 - $2,000 = $28,000
Depreciated cost ÷ Useful life = Annual
Depreciation
$28,000 ÷ 8 yrs = $3,500
Year Dep. Cost Dep. rate annual dep. Acc. Dep.
Value
2008 $28,000 × 12.5% = $3,500 3,500 $24,500
2009 $28,000 × 12.5% = $3,500 7,000 $21,000
Units of Activity Method
Dep. Cost ÷ Total units of activity = Dep. Cost per
unit
$28,000 ÷ 100,000 miles = $.28
Dep. Cost per unit × unit of activity during year =
annual dep. Exp.
$.28 × 15,000 miles = $4,200 (2008)
$.28 × 12,000 miles = $3,360 (2009)
Declining Balance Method
Book value beg. of year × declining balance rate =

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Ann. Dep. Rate
$30,000 × 25% = $7,500 (2008)
$22,500 × 25% = $5,625 (2009)
E10-2
1. Equipment
2. Equipment
3. Plant
4. Property
5. Equipment
6. Property
7. Property
8. Property
9. Plant
E10-9
Jan 1 Accumulated Depreciation – Machinery
$62,000
Machinery $62,000
(to record retirement of fully depreciated
equipment)
Jun 30 Depreciation expense $4,000
Accumulated Depreciation $4,000
( to record depreciation exp. For the first 6 months)
Jun 30 Cash $14,000
Accumulated depreciation $28,000
Computer $40,000

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Gain on disposal $2,000
(sale of computer)
Dec 31 Accumulated Depreciation – truck $36,000
Loss on disposal $6,000
Truck $36,000
(record disposal of truck)
E9-3
Dec 31 Bad debt expense $1,400
Accounts Receivable -Fells $1,400

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