Prepare a depreciation schedule for the assets in the below transactions using s
ID: 2768622 • Letter: P
Question
Prepare a depreciation schedule for the assets in the below transactions using straight line method of depreciation: A.) Flash Enterprises purchased 3 new delivery trucks at a cost of $45,000. Each Truck has an estimated useful life of 5 years. B. Flash needed a new forklift to be used in warehouse operations at a cost of $12, 500. The old forklift was traded in for $1,500. The new forklift has an estimated useful life of 4 years. #2. Analyze the results of the below: A. Flash has an opportunity to sell one of the trucks from (1A) above after 3 years for a price of $15,000. Should they accept the offer? why or why not? B. The used forklift from (1B) above had an original cost of $10,000 and a book value of $500 at the time of trade in. Calculate any gain or loss and show the appropriate journal entry.
Explanation / Answer
1(A) Delivery Trucks: Cost of new delivery trucks = 45000*3 = 135000 Estimated useful life 5 Years Annual Depreciation = 135000/5 = 27000 Thus, depreciation is $ 27,000 1(B) New Forklift: Cost = 12500 Sale of old machine = 1500 Net cost of machine = 11000 Life = 4 Years Annual depreciation = 2750 Thus, Annual depreciation is $ 2750 Cost of one machine = 45000 Estimated useful life 5 Years Annual Depreciation = 45000/5 = 9000 Depreciation for 3 years = 9000*3 = 27000 Written down value = 18000 Sale price after 3 years = 15000 Loss on sale = $ 3000