USA Depreciation of Assets:) I badly need help

[ghailexx]

The Harmonica Company owns a Delivery Truck purchased on September 1, 2013 costing $255,000 and an Equipment worth $175,000 purchased on December 1, 2012. All fixed assets are depreciated over a 10 year period.

a) Give the adjusting entries on December 31, 2013 to record depreciation?

b) How much would be the balance of Equipment on December 31, 2015?

c) How much would be the book value of Equipment for the Year ended December 31, 2015?

 

[longnguyen87]

HI ghailexx,

I will do my best to help you with this problem.
a. Depreciation Expense
Depreciation Expense (Truck) $8,500.00
Accumulated Depreciation (Truck) $8,500.00
(* truck will be depreciated for 4 months: 255000/10*4/12)
Depreciation Expense (Equip) $17,500.00
Accumulated Depreciation (E) $17,500.00
(*Equipment will be depreciated for 12 month)
c. Book Value of equipment on BS at of 2015
Equipment (At end of 2012, 1 month) depreciation $173,541.67
Equipment (At end of 2013) $156,041.67
Equipment (At end of 2015) $121,041.67

1 month of depreciation is calculated as: 175000/ (12*10). Then for the year from 2013 to 2015, each year depreciation will be $17500. Subtract depreciation from the balance at the beginning of the year for the year depreciation will give you end of year balance.For example, End of 2013= 173541.67- 17500
End of 2015= 156041.67- 17500*2

*b. Balance of Equipment vs. Book Value. I interpret the question asking for the historical cost of Equipment in question b). Sometime balance and BV of assets mean the same thing.

 

[Pal aCC]

HI ghailexx,

I will do my best to help you with this problem.
a. Depreciation Expense
Depreciation Expense (Truck) $8,500.00
Accumulated Depreciation (Truck) $8,500.00
(* truck will be depreciated for 4 months: 255000/10*4/12)
Depreciation Expense (Equip) $17,500.00
Accumulated Depreciation (E) $17,500.00
(*Equipment will be depreciated for 12 month)
c. Book Value of equipment on BS at of 2015
Equipment (At end of 2012, 1 month) depreciation $173,541.67
Equipment (At end of 2013) $156,041.67
Equipment (At end of 2015) $121,041.67

1 month of depreciation is calculated as: 175000/ (12*10). Then for the year from 2013 to 2015, each year depreciation will be $17500. Subtract depreciation from the balance at the beginning of the year for the year depreciation will give you end of year balance.For example, End of 2013= 173541.67- 17500
End of 2015= 156041.67- 17500*2

*b. Balance of Equipment vs. Book Value. I interpret the question asking for the historical cost of Equipment in question b). Sometime balance and BV of assets mean the same thing.

which depreciation method used ? because he didn't specify which method is required and annual depreciation differ from method to another unless asset totally depreciated accumulated depreciation will be different therefore book value will be different depending on which method is used