Plant and equipment D&D applies the half-year rule in depreciating plant and equ
ID: 2424616 • Letter: P
Question
Plant and equipment D&D applies the half-year rule in depreciating plant and equipment, as well as in amortizing intangible assets. Buildings, mobile equipment, automobiles and office equipment are depreciated using the straight-line method. Tools and equipment are depreciated using declining balance methods. The depreciation rates on tools and equipment vary from 17.5% to 33% per year. Computer equipment is depreciated using a double-declining rate method at 62.5% per year. The property, plant and equipment schedule (located in the Excel worksheet titled “PPE-Student”) provides the rates for each category of asset.
On December 5, 20X7, warehouse equipment with a cost of $85,600 was delivered. The equipment was immediately put into service. The useful life is expected to be 11 years, with an expected salvage value of $10,500. This equipment is depreciated using the declining balance method at a rate of 17.5%. The invoice for this equipment has not been received and the purchase has not been recorded.
In October 20X7, the company disposed of several hand tools. The cost of these tools was $21,300, and at the time of disposal, accumulated depreciation was $18,899. The equipment sold for total proceeds of $6,500. The funds received were recorded by the company as a gain on sale of property, plant and equipment of $6,500.
Depreciation for 20X7 has not yet been recorded for any of the PPE held by the company.
Prepare the journal entry/entries to record the property, plant and equipment transactions. Use the Excel worksheet titled “PPE-Student”: i. Update the Additions, Disposals, Revaluations / impairments and Depreciation columns in “PPE-Student” (columns Q, R, T and Y, respectively). ii. Record your journal entries in the “AJEs-Student” worksheet.
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please message me to see my spreadsheet. I have attempted this but to no avail
Explanation / Answer
Tools and equipment computer Deprecition 17.5% to 33% 62.50% cost 5-Dec 85600 useful life 11 yrs exp salvage value 10500 Deprecition 17.50% Journal Debit Credit Equipment 85600 Cash 85600 Deprecition 14980 Accumulated depreciation 14980 Oct Cost of tools 21300 Accumulaed dep 18899 WDV 2401 Sale value 6500 Gain on sale 4099