PPE PPT_Ch10

Property, Plant and Equipment and IntangiblesPowerPoint Slides to accompanyFundamental Accounting Principles, 14cePrepared byJoe Pidutti, Durham CollegeCHAPTER10 2013 McGraw-Hill Ryerson Limited.

2013 McGraw-Hill Ryerson Limited.

Describe property, plant and equipment (PPE) and calculate their cost. (LO1)

Explain, record, and calculate depreciation using the methods of straight-line, units of production, and double-declining balance. (LO2)

Explain and calculate depreciation for partial years. (LO3)

Explain and calculate revised depreciation. (LO4)

Explain and record impairment losses. (LO5)

Account for asset disposal through discarding, selling, or exchanging an asset. (LO6)

Account for intangible assets and their amortization. (LO7)

2013 McGraw-Hill Ryerson Limited.Learning Objectives*


Characteristics:

Non-current assets used in the operations of a company.Have a useful life greater than one accounting period.(More than 1 year)May be classified as Tangible or Intangible.Also referred to as Fixed Assets.

Examples: buildings, land, equipment, machinery, leasehold improvements, and vehicles.

2013 McGraw-Hill Ryerson Limited.Property, Plant and Equipment (PPE)LO 1*


Lack physical substance.Examples: patents, trademarks, copyrights, leaseholds and drilling rights.

2013 McGraw-Hill Ryerson Limited.Intangible AssetsLO 1*

Cost of PPE

PPE are recorded at cost, which includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.


Are costs of PPE that provide material benefits extending beyond the current period.

Are reported on the balance sheet under PPE.

(Cost of machine, freight charges, unpacking cost, assembling cost, less discount, non refundable sales tax (PST) cost of installation and testing of machine , adjusting the machine before operation etc.) 2013 McGraw-Hill Ryerson Limited.Capital ExpendituresLO 1*


Are costs that maintain an asset but do not materially increase the assets life or productive capabilities.

Are reported on the income statement as expenses.

(Examples: supplies, lubricants, repair and maintenance costs of machine.) 2013 McGraw-Hill Ryerson Limited.Revenue ExpendituresLO 1*


Expenditures that make PPE more efficient or productive and/or extend the useful life of the PPE beyond original expectations.

Examples of C.E: roofing replacement, plant expansion and major overhauls of machinery and equipment.Example of R.E: Supplies, lubricants, Fuel and Electric power 2013 McGraw-Hill Ryerson Limited.Subsequent ExpendituresLO 1*


Is not subject to depreciation.Cost of land includes:Purchase priceLegal feesReal estate commissionsAccrued property taxesPayments for surveying, grading, draining, and clearing the landAssessments by local governments 2013 McGraw-Hill Ryerson Limited.LandLO 1*


Assets that increase the usefulness of the land but have a limited life.Costs are charged to a separate PPE account.Costs are allocated over the period they benefit.Cost examples include parking lot surfaces, driveways, fences and lighting systems. 2013 McGraw-Hill Ryerson Limited.Land ImprovementsLO 1*


Costs include all expenditures to make the building ready for its intended use.Costs are depreciated over the period they benefit.Cost examples include purchase price, brokerage fees, taxes, title fees and legal costs.

Leasehold improvement

Costs of alterations or improvements to leased property.Costs are depreciated over the life of the improvements or the life of the lease, whichever is shorter.Examples include flooring, painting, storefronts, and partitions.

2013 McGraw-Hill Ryerson Limited.BuildingsLO 1*


Costs include all expenditures normal and necessary to purchase it and prepare it for its intended use.

Costs are depreciated over the periods they benefit.

Cost examples include purchase price, less discounts, plus non-refundable sales taxes, transportation charges, insurance while in transit. 2013 McGraw-Hill Ryerson Limited.Machinery and EquipmentLO 1*


QS- 1Sydney Lanes installed automatic scorekeeping equipment. The electrical work required to prepare for the installation was $18,000. The invoice price of the equipment was $180,000. Additional costs were $3,000 for delivery and $600 for insurance during transportation. During the installation, a component of the equipment was damaged because it was carelessly left on a lane and hit by the automatic lane cleaning machine during a daily maintenance run. The cost of repairing the component was $2,250. What is the cost of the automatic scorekeeping equipment?12-* 2013 McGraw-Hill Ryerson Limited.


Solution

Price of equipment $180,000Installation Charges 18,000Delivery charges 3,000Insurance Expense 600TOTAL 201,60012-* 2013 McGraw-Hill Ryerson Limited.


Exercise 10-1On January 10th Dalton Resources Co. purchased a machine for $12,000, terms 4/10, n/60, FOB destination. The seller prepaid the freight charges, $350. The machine required a special steel mounting and power connections costing $800, and another $600 was paid to assemble the machine and get it into operation. In moving the machine onto its steel mounting, it was dropped and damaged. The repairs cost $290. Later, $400 of raw materials were consumed in adjusting the machine so that it would produce a satisfactory product. The adjustments were normal for this type of machine and were not the result of the damage. However, the items produced while the adjustments were being made were not saleable. Dalton paid the invoice on January 24th. Prepare a calculation to show the cost of this machine for accounting purposes.

12-* 2013 McGraw-Hill Ryerson Limited.


Solution12-* 2013 McGraw-Hill Ryerson Limited.

ItemAmountMachine Costs$ 12,000Freightn/aMounting800Assembly600Repairsn/aTesting materials400Invoice Discountn/aTotal$ 13,800


Exercise12-* 2013 McGraw-Hill Ryerson Limited.ABC Manufacturing purchased a machine on August 1, 2014, and it was installed and ready to run on January 1, 2015. The following costs were incurred in the purchase and installation of the machine. Invoice Price$ 1,300,000Freight Costs 7,000Purchase Discount 2,500Installation Costs 66,000Electrical and Utility Connections 32,000Repairs to correct damage incurred during uncrating 12,000Setting Adjustment costs 36,000Spare parts for future use 25,000Provincial Sales Tax 91,000Fines incurred during transport of the machine 500Cost of special foundation for the machine 6,500Calculate the depreciable cost of the machine.


SolutionTOTAL COST OF MACHINE =

Invoice price + freight costs- purchase discount+ installation cost + electrical and utility connections + adjustment costs + provincial sales tax + and special foundation for machine:

= $1,536,000



A process of matching (or allocating) the depreciable cost of an asset in a rational and systematic manner over the assets useful life.

Depreciation does not measure the decline in market value of an asset.

Depreciation begins to be recorded when the asset is put into use.

PPE help the organization earn revenues over several accounting periods.

The cost of these PPE are depreciated (spread out) over these same periods.

2013 McGraw-Hill Ryerson Limited.DepreciationLO 2*


Factors relevant in determining depreciation:

CostResidual value (Value of assets at the end of life)Useful (service) life 2013 McGraw-Hill Ryerson Limited.DepreciationLO 2*


The most commonly used methods are:

Straight-lineUnits-of-productionDouble-declining balance 2013 McGraw-Hill Ryerson Limited.Depreciation MethodsLO 2*


The same amount is expensed each period of the assets useful life.Straight-line depreciation expense=Cost Estimated residual valueEstimated useful lifeStraight-Line Method 2013 McGraw-Hill Ryerson Limited.LO 2*


A piece of shoe-inspection machinery is purchased on January 1, 2014. The relevant data is as follows:Cost $10,000Estimated residual value -1,000Cost to be depreciated $9,000

Estimated useful life: Accounting periods 5 years Units inspected 36,000 shoesIllustration 2013 McGraw-Hill Ryerson Limited.LO 2*


Straight-line depreciation expense=Cost Estimated residual valueEstimated useful life in years $10,000 $1,0005 years==$1,800/ year 2013 McGraw-Hill Ryerson Limited.Illustration: Straight-Line MethodLO 2*


Illustration: Straight-Line MethodThe annual adjusting entry to record depreciation on this equipment would be:Depreciation Expense 1,800 Accumulated Deprec. -Equipment 1,800 2013 McGraw-Hill Ryerson Limited.LO 2*

20142015201620172018Equipment$10,000$10,000$10,000$10,000$10,000Less: Acc. Deprec. 1,800 3,600 5,400 7,200 9,000Book Value$8,200$6,400$4,600$2,800$1,000


This method is employed when the use of an asset varies greatly from one period to the next.The amount charged to expense is based on the usage of the asset. 2013 McGraw-Hill Ryerson Limited.Depreciation per unit=Cost Estimated residual valueTotal estimated units of productionAnnual depreciation expense=Actual productionxdepreciation per unitUnits-of-Production MethodLO 2*


Depreciation per unit (shoe)Illustration: Units-of-Production Method$10,000 $1,00036,000 units (shoes)=$.25/shoeAssume actual production is as follows: 2014 2015 2016 2017 2018Units (shoes) 7,000 8,000 9,000 7,000 6,000 x.25 x.25 x.25 x.25 x.25depreciation $1,750 $2,000 $2,250 $1,750 $1,250*=*Maximum depreciation allowed since 36,000 units have been produced. 2013 McGraw-Hill Ryerson Limited.LO 2*


2013 McGraw-Hill Ryerson Limited.Illustration: Units-of-Production MethodLO 2*



This method yields larger depreciation expenses in the early years of an assets life and smaller charges in later years.

A depreciation rate, up to twice the straight-line rate, is applied to the assets beginning of the period book value. 2013 McGraw-Hill Ryerson Limited.Declining-Balance MethodLO 2*


Steps:Calculate the double-declining balance rate.* rate = 2 / (Estimated years of useful life)

Calculate deprecation expense by multiplying the rate by the assets beginning-of-period book value. (depreciation expense = rate x book value)

*Note: Residual value is not used in these calculations. 2013 McGraw-Hill Ryerson Limited.Double-Declining Balance MethodLO 2*


Illustration: Double-Declining-Balance MethodRate = 2 / 5 years x 100% = 40% per year 2013 McGraw-Hill Ryerson Limited.LO 2*

YearBook Value atstart of periodDepreciation ExpenseAccumulated DepreciationBook Value atend of period2014$10,00040% x 10,000 = $4,000 $4,000 $6,0002015 6,00040% x 6,000= 2,400 6,400 3,6002016 3,60040% x 3,600= 1,440 7,840 2,1602017 2,16040% x 2,160= 864 8,704 1,2962018 1,296 296 (maximum) 9,000 1,000(residual value)


2013 McGraw-Hill Ryerson Limited.Illustration: Double-Declining-Balance MethodLO 2*



2013 McGraw-Hill Ryerson Limited.Comparison of MethodsLO 2*

PeriodStraight-lineUnits-of-productionDouble-Declining Balance2014$1,800$1,750$4,00020151,8002,0002,40020161,8002,2501,44020171,8001,7508642018 1,800 1,250 296$9,000$9,000$9,000


Exercise 10-8On January 3, 2014, Xenex Innovations purchased computer equipment for $125,250. The equipment will be used in research and development activities for five years or a total of 8,500 hours and then sold for about $19,000. Prepare a schedule with headings as shown below. Calculate depreciation and book values for each year of the equipment's life for each method of depreciation. Xenex's year-end is December 31.

12-* 2013 McGraw-Hill Ryerson Limited.Actual Usage in hours of:


Solution:


Straight-Line1Double-Declining-Balance2Units-of-Production3YearDepreciation ExpenseBook Value at December 31Depreciation ExpenseBook Value at December 31Depreciation ExpenseBook Value at December 31201421,250104,00050,10075,15016,875108,375201521,25082,75030,06045,09022,25086,125201621,25061,50018,03627,05430,00056,125201721,25040,2508,05419,00037,12519,000201821,25019,000019,000019,000


Calculations:

1. 125,250 19,000 = 106,250/5 = 21,250

2. 2/5 = .4 or 40%; .4 x 125,250 = 50,100; .4 x (125,250 50,100) = 30,060;.4 x (125,250 50,100 30,060) = 18,036; .4 x (125,250 50,100 30,060 18,036) = 10,822; maximum = 8,054 calculated as cost less residual = 125,250 19,000 = 106,250 less total deprec. taken of 98,196 = 8,054.

3. 125,250 19,000 = 106,250/8,500 = $12.50/hour;2014 12.50 x 1,350 = 16,875;2015 12.50 x 1,780 = 22,250;2016 12.50 x 2,400 = 30,000;2017 12.50 x 2,980 = 37,250; maximum = 37,125; calculated as cost less residual = 125,250 19,000 = 106,250 less total deprec. taken of 69,125 = 37,125.



Assets may be purchased or disposed of at any time during the year.

Depreciation for a partial year is recorded when the purchase or disposal is made at a time other than the beginning or end of the accounting period. 2013 McGraw-Hill Ryerson Limited.Partial-Year DepreciationLO 3*


Methods:Nearest whole monthIf the asset is in use for more than half of the month, depreciation is calculated for the whole month.

If the asset is in use for less than half of the month, depreciation is not calculated for the month.Half-year conventionSix months depreciation is recorded regardless when an asset is acquired or disposed of. 2013 McGraw-Hill Ryerson Limited.Partial-Year DepreciationLO 3*Nearest whole month and half year convention doesnt apply on Unit of production method.


Mini-Quiz Gamma Company purchased a computer costing $4,000 on April 18. It is expected to last for three years and then sell for $400.Calculate depreciation for the first year using the:Straight-line method.Double declining balance method.

2013 McGraw-Hill Ryerson Limited.*


Gamma Company purchased a computer costing $4,000 on April 18. It is expected to last for three years and then sell for $400.Straight-line depreciation expense=Cost Estimated residual valueEstimated useful life=$4,000 $4003 yearsX 8/12 year= $800XPortion of year 2013 McGraw-Hill Ryerson Limited.Mini-Quiz*


Gamma Company purchased a computer costing $4,000 on April 18. It is expected to last for three years and then sell for $400.DDB depreciation expense=== $1,778 (rounded)DDB rate x Cost x Portion of year(2 x 1/3) x $4,000 x 8/12 2013 McGraw-Hill Ryerson Limited.Mini-Quiz*


Exercise 10-13VanHoutte Foods bought machinery on September 10, 2014, for $156,000. It was determined that the machinery would be used for six years or until it produced 200,000 units and then would be sold for about $26,400. Calculate annual depreciation to the nearest whole month for 2014, 2015, and 2016. VanHoutte's year-end is December 31. Assume the actual unit produced are: 2014 31,000; 2015 67,000; 2016 52,000.

Required to use : Straight line and unit production methods.



Solution (1)Calculate straight line depreciation.156,000 26,400 = 129,600/6 = 21,60021,600 x 4/12 = 7,200


Year

Straight-Line

2014

7,200

2015

21,600

2016

21,600


Solution (2)Calculate Units-of-Production depreciation.

156,000 26,400 = 129,600129,600/200,000 = $0.648/unit

2014 - 0.648 x 31,000 = 20,088 2015 - 0.648 x 67,000 = 43,416 2016 - 0.648 x 52,000 = 33,696



Depreciation rates for current and future periods may be revised if there is a change in an assets:

Estimated residual value and/or useful life.orCost due to subsequent capital expenditures. 2013 McGraw-Hill Ryerson Limited.Revising Depreciation RatesLO 4*


The undepreciated cost of the asset is depreciated (allocated) over the remaining life of the asset.

This is considered to be a change in an accounting estimate and not an error.

2013 McGraw-Hill Ryerson Limited.Changes in Estimated Residual Value and/or Estimated Useful Life

LO 4*


Example: Straight-line Method

2013 McGraw-Hill Ryerson Limited.Revised depreciation for remaining years =Remaining book valueRevised residual valueRevised remaining useful lifeChanges in Estimated Residual Value and/or Estimated Useful LifeLO 4*


Subsequent capital expenditures cause the cost of an asset to change.

These expenditures can be the addition of a component to an existing asset or the replacement or overhaul of a component.

2013 McGraw-Hill Ryerson Limited.Revising Depreciation Rates When There is a Subsequent Capital ExpenditureLO 4*


Revised depreciation is calculated to reflect the new cost and/or changes in estimated life/residual value.

When a subsequent expenditure results in a replacement of a component, the cost and accum. depreciation of the component must be removed and a gain or loss is recorded.

2013 McGraw-Hill Ryerson Limited.Revising Depreciation Rates When There is a Subsequent Capital ExpenditureLO 4*


Problem 10-11BThe December 31, 2014, adjusted trial balance of Ondine Biomedical showed the following information:


ContDuring 2015, a major increase in market demand for building space caused the company to assess the useful life and residual value of the building. It was decided that the useful life would be increased by five years and the residual value increased by $48,000. At the beginning of 2015, it was determined that the remaining estimated life of the equipment should be 10 years and the residual value $6,000. Ondine Biomedical calculates depreciation using the straight-line method to the nearest month (round calculations to the nearest whole dollar).RequiredPrepare the entries to record depreciation on the building and equipment for the year ended December 31, 2015.


Solution

2015Dec 31Depreciation Exp. - Building1620 Accumulated Depreciation1620 (To record annual Dep.) Dec 31Depreciation Exp. - Equipment7,320Accumulated Depreciation7,320(To record annual depreciation on Equipment)


CalculationCost Accumulated Depreciation Residual/ life of year

1. 274,800 134,400 108,000/20 = 1,620

2. 117,600 38,400 6,000/10 = 7,320


An impairment loss occurs when the book value of PPE is greater than the amount to be recovered through the assets use or sale.

Impairments may result from:A significant decline in the market value of the asset.Technological, economic, or legal factors.

2013 McGraw-Hill Ryerson Limited.Impairment of PPE AssetsLO 5*


If an impairment loss occurs:

The loss is recorded.Depreciation is revised for future periods.

2013 McGraw-Hill Ryerson Limited.Impairment of PPE AssetsLO 5*


Capital assets may be disposed of for a variety of reasons such as:ObsolescenceWear and tearDamageChanging business plans 2013 McGraw-Hill Ryerson Limited.Disposal of Capital AssetsLO 6*


Accounting for disposal involves:

Record depreciation up to date of disposal.Compare the assets book value with the net amount received/paid at disposal and record any resulting gain/loss.Remove the balances of the disposed asset and related accumulated depreciation accounts.Record any cash (and other assets) received or paid in the disposal. 2013 McGraw-Hill Ryerson Limited.Disposal of PPELO 6*


Exercise 10-21Gandalf Co. purchased and installed a machine on January 1, 2014, at a total cost of $296,800. Straight-line depreciation was taken each year for four years, based on the assumption of a seven-year life and no residual value. The machine was disposed of on July 1, 2018, during its fifth year of service. Gandalf's year-end is December 31.

Required: Present the entries to record the partial year's depreciation on July 1, 2018, and to record the disposal under each of the following unrelated assumptions: The machine was sold for $112,000 cash.Gandalf received an insurance settlement of $96,000 resulting from the total destruction of the machine in a fire.


Exercise 10-21Depreciation up to the beginning of 2018:

(296,800/7) 4 years = 169,600 Depreciation for 2018:

(296,800/7) 6/12 = 21,200


Exercise 10-21

2018July 1Depreciation Expense21,200 Accumulated Depreciation21,200To record partial year depreciation in year of disposal


Exercise 10-21 Part A

2018July 1Accumulated Depreciation 190,800Cash112,000 Machine296,800 Gain on Disposal 6,000To record sale of machine for $112,000


Exercise 10-21 Part B

2018July 1Accumulated Depreciation 190,800Cash 96,000Loss on Disposal 10,000 Machine296,800To record receipt of $96,000 from insurance settlement


Exercise 10-24 Part AOn January 2, 2014, Dusseault Apparel disposed of a machine that cost $84,000 and had been depreciated $45,250. Present the journal entries to record the disposal under the following assumption:

The machine was sold for $32,500 cash


Exercise 10-24 Part A

2014Jan 2Accumulated Depreciation 45,250Cash32,500Loss on Disposal 6,250 Machine84,000To record sale of machine


Exercise 10-24 Part BOn January 2, 2014, Dusseault Apparel disposed of a machine that cost $84,000 and had been depreciated $45,250. Present the journal entries to record the disposal under the following assumption:

The machine was traded-in on new tools having a $117,000 cash price. A $40,000 trade-in allowance was received, and the balance was paid in cash. Since the tools have been customized, the fair values are not known.


Exercise 10-24 Part B

2014Jan 2Accumulated Depreciation 45,250Tools115,750 Cash 77,000 Machine84,000To record exchange of machine; Value of assets given up = cash + book value of machine


Exercise 10-24 Part COn January 2, 2014, Dusseault Apparel disposed of a machine that cost $84,000 and had been depreciated $45,250. Present the journal entries to record the disposal under the following assumption:

The machine plus $68,000 cash was exchanged for a cube van having a fair value of $104,000.


Exercise 10-24 Part C

2014Jan 2Accumulated Depreciation 45,250Van104,000Loss on Disposal 2,750 Cash68,000 Machine84,000To record exchange of machine;


Exercise 10-24 Part DOn January 2, 2014, Dusseault Apparel disposed of a machine that cost $84,000 and had been depreciated $45,250. Present the journal entries to record the disposal under the following assumption:

The machine was traded for vacant land adjacent to the shop to be used as a parking lot. The land had a fair value of $75,000, and Dusseault paid $25,000 cash in addition to giving the seller the machine.


Exercise 10-24 Part D

2014Jan 2Accumulated Depreciation 45,250Land75,000 Cash 25,000 Gain on Disposal11,250 Machine84,000To record exchange


Exercise 10-27Other information:

All accounts have normal balances.

$38,000 of the note payable is due after October 31, 2015.


Exercise 10-27

AssetsCurrent assets:Cash$ 9,600Accounts receivable$ 27,200Less: Allowance for doubtful accounts 1,920 25,280Total current assets$ 34,880Property, plant and equipment: Land$ 89,600 Building$ 147,200 Less: Accumulated depreciation 81,60065,600Equipment$184,000 Less: Accumulated depreciation 110,400 73,600 Total property, plant and equipment228,800 Intangible assets: Mineral rights$ 57,600 Less: Accumulated amortization 30,400$ 27,200 Trademark$ 33,600 Less: Accumulated amortization 22,400 11,200 Total intangible assets 38,400Total assets$302,080LiabilitiesCurrent liabilities:Accounts payable$18,400 Current portion of long-term note 34,000 Total current liabilities$ 52,400Long-term liabilities:Note payable, less current portion 38,000Total liabilities$ 90,400EquityAve Quia, capital 211,6801Total liabilities and equity$302,080


Have no physical substance.Are used in operations.Provide future economic benefits.Are recorded at cost when purchased.Examples include patents, copyrights, trademarks, drilling rights, trademarks and trade names, and leaseholds. 2013 McGraw-Hill Ryerson Limited.Intangible AssetsLO 7*


Are recorded at cost when purchased.Cost is amortized over estimated useful life.The straight-line method is usually used.Are shown on the balance sheet separately from PPE. 2013 McGraw-Hill Ryerson Limited.Intangible AssetsLO 7*


The amount by which the price paid for a company exceeds the fair market value of the companys net assets if purchased separately.Goodwill Is not an intangible asset.Is reported separately on the balance sheet.Is not amortized but may be decreased if it is impaired.

2013 McGraw-Hill Ryerson Limited.GoodwillLO 7*


Problem 10-18B (1)On Febrary 3, 2014, Abacus Software Group purchased the patent for a new software for cash of $220,800. The company expects the software to be sold over the next five years and uses the straight-line method to amortize intangibles.RequiredPrepare entries to record the: Purchase of the software patent, andStraight-line amortization for the year ended December 31, 2014, calculated to the nearest whole month. Round to the nearest dollar.


Solution Part A & B

2014Feb 3Patent220,800 Cash220,800 (To record purchase of patent) Dec 31 Amortization Expenses- patent 40,480Accumulated amortization40,480(To record amortization on patent)


Problem 10-18B(2)On December 31, 2014, the company's adjusted trial balance showed the additional asset accounts shown below. Prepare the asset section of the balance sheet at December 31, 2014, including the patent purchased on February 3, 2014


Solution (2)Abacus Software GroupPartial Balance SheetDecember 31, 2014AssetsCurrent assets:Cash ...................................................................... $103,200Accounts receivable (net) ..................................... 277,200Merchandise inventory ....................................... .135,600Total current assets ...............................................................................................................$ 516,000

Property, plant and equipment:Land ...................................................................... $110,400Building ................................................................ $595,200Less: Accumulated depreciation, building (189,000) 406,200Equipment ............................................................ $477,600Less: Accumulated depreciation, equip. .................. (259,200 )218,400Total property, plant and equipment ..735,000Intangible assets:Patent .................................................................... $220,800Less: Accumulated amortization, patent ................... 40,480 180,320Total assets ................................................................... ..$1,431,320


ExcerciseXeno Co. incurred the following transactions concerning its machinery: 8-Jan-14Purchased a machine for $55,000 cash and also paid $3,000 cash to have it installed. Estimated useful life is 10 years and residual value is $5,000. Straight line depreciation is used.1-Jan-15The machines useful life is changed from 10 years to 9.5-Jan-15General Maintenance on the machine was completed for $800.1-Jan-16Paid $3,800 to replace a motor in the machine. This was considered a major overhaul but did not alter the machines useful life.

Xeno Co uses the calendar year as its fiscal year.Prepare the journal entry to record depreciation expense for 2014.Prepare the journal entry to record depreciation expense for 2015.Prepare the journal entry to record depreciation expense for 2016.



Solution12-* 2013 McGraw-Hill Ryerson Limited.


End of Chapter 2013 McGraw-Hill Ryerson Limited.*


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