E9.

5 Determine straight line depreciation for partial period

Gotham Company purchased a new machine on October 1, 2022, at a cost of $90,000. The company
estimated that the machine has a salvage value of $8,000. The machine is expected to be used for
70,000 working hours during its 8-year life.

Instructions
Compute the depreciation expense under the straight-line method for 2022 and 2023, assuming a
December 31 year-end.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a

Cost $90,000
Salvage value 8,000
Depreciable cost $82,000
Useful life 8 years
Annual depreciation $10,250

2022 Depreciation $10,250 X 3/12 = $2,562.50

2023 Depreciation $10,250

After you have completed E9.5, consider the additional question.

1. Assume that the cost of the new machine changed to $85,000. Determine the impact of this chan
on 2022 and 2023 depreciation.

Cost $85,000
Salvage value 8,000
Depreciable cost $77,000
Useful life 8 years
Annual depreciation $9,625

2022 Depreciation $9,625 X 3/12 = $2,406.25

2023 Depreciation $9,625
 ,000. The company
ted to be used for

23, assuming a

a formula in cells with a "?" .

e the impact of this change

E9.9 Journalize transactions related to disposals of plant assets
Thieu Co. has delivery equipment that cost $50,000 and has been depreciated $24,000.

Instructions
Record entries for the disposal under the following assumptions.
(a) It was scrapped as having no value.
(b) It was sold for $37,000.
(c ) It was sold for $20,000
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a

(a) Loss on Disposal of Assets 26,000

Accumulated Depreciation - Equipment 24,000
Equipment 50,000

(b) Cash 37,000

Accumulated Depreciation - Equipment 24,000
Equipment 50,000
Gain on Disposal of Equipment 11,000

(c ) Cash 20,000
Accumulated Depreciation - Equipment 24,000
Loss on Diposal of Equipment 6,000
Loss on Disposal of Equipment 50,000

After you have completed E9.9, consider the following additional question.
1. Assume that the accumulated depreciation up to the time of disposal changed to $30,000. Show the
of this change on each of the scenario given.

(a) Loss on Disposal of Assets 20,000

Accumulated Depreciation - Equipment 30,000
Equipment 50,000

(b) Cash 37,000

Accumulated Depreciation - Equipment 30,000
Equipment 50,000
 Gain on Disposal of Equipment 17,000

(c ) Cash 20,000
Accumulated Depreciation - Equipment 30,000
Loss on Disposal of Equipment 50,000
 formula in cells with a "?" .

d to $30,000. Show the impact

P9.2A Journalize equipment transactions related to purchase, sales, retirements and depreciation
At December 31, 2022, Arnold Corporation reported the following plant assets.

Land
Buildings $26,500,000
Less: Accumulated depreciation -buildings 11,925,000
Equipment 40,000,000
Less: Accumulated depreciation -equipment 5,000,000
Total plant assets

During 2023, the following selected cash transactions occurred.

Apr. 1 Purchased land for $2,200,000.
May 1 Sold equipment that cost $600,000 when purchased on January 1, 2016.
The equipment was sold for $170,000.
June 1 Sold land for $1,600,000. The land cost $1,000,000.
July 1 Purchased equipment for $1,100,000.
Dec. 31 Retired equipment that cost $700,000 when purchased on December 31,
2013. No salvage value was received.

Instructions
(a) Journalize the transactions. (Hint: You may wish to set up T-accounts, post beginning balances,
and then post 2023 transactions.) Arnold uses straight-line depreciation for buildings and
equipment. The buildings are estimated to have a 40-year useful life and no salvage value; the
equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation
on assets disposed of at the time of sale or retirement.
(b) Record adjusting entries for depreciation for 2023.
(c) Prepare the plant assets section of Arnold's balance sheet at December 31, 2023.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a

(a) April 1 Land 2,200,000

Cash

May 1 Depreciation expense 20,000

Accumulated Depreciation - Equipment

May 1 Cash 170,000

Accumulated Depreciation - Equipment 440,000
Equipment
Gain on Disposal of Equipment Assets
 June 1 Cash 1,600,000
Land
Gain on Disposal of Land Assets

July 1 Equipment 1,100,000

Cash

Dec. 31 Depreciation Expense 70,000

Accumulated deprecation - Equipment
700000/10

31 Accumulated depreciation - Equipment 700,000

Equipment

(b) Dec. 31 Depreciation Expense 3,925,000

Accumulated Depreciation - Equipment

Dec 31 Depreciation Expense 662,500

Accumulated Depreciation - Buildings

(c ) ARNOLD CORPORATION
Partial Balance Sheet
December 31, 2023
Plant Assets
Land
Buildings $26,500,000
Less: Accumulated depreciation - buildings 12,587,500
Equipment 39,800,000
Less: Accumulated depreciation - equipment 7,875,000
Total plant assets

Land
12/31/22 3,000,000 6/1/23 1,000,000
04/01/23 2,200,000
 12/31/23 Bal. 4,200,000

Buildings
12/31/22 26,500,000

12/31/23 Bal. 26,500,000

Equipment
12/31/22 40,000,000 05/01/23 600,000
07/01/23 1,100,000 12/31/23 700,000

12/31/23 Bal. 39,800,000

Accumulated Depreciation - Building

12/31/22 11,925,000
12/31/23 662,500

12/31/23 Bal. 12,587,500

Accumulated Depreciation - Equipment

05/01/23 440,000 12/31/22 5,000,000
12/31/23 700,000 05/01/23 20,000
12/31/23 70,000
12/31/23 3,925,000

12/31/23 Bal. 7,875,000

After you have completed P9.2A, consider the following additional question.
1. Assume that the selling price of equipment and land changed to $168,000 and $1,300,000 respectiv
Show the impact of these changes on the journal entries.

(a) April 1 Land 2,200,000

Cash
 May 1 Depreciation expense 20,000
Accumulated Depreciation - Equipment

May 1 Cash 168,000

Accumulated Depreciation - Equipment 440,000
Equipment
Gain on Disposal of Equipment Assets

June 1 Cash 1,300,000

Land
Gain on Disposal of Land Assets

July 1 Equipment 1,100,000

Cash

Dec. 31 Depreciation Expense 70,000

Accumulated deprecation - Equipment
700000/10

31 Accumulated depreciation - Equipment 700,000

Equipment

(b) Dec. 31 Depreciation Expense 3,925,000

Accumulated Depreciation - Equipment

Dec 31 Depreciation Expense 17,500

Accumulated Depreciation - Buildings

(c ) ARNOLD CORPORATION
Partial Balance Sheet
December 31, 2023
Plant Assets
Land
Buildings $26,500,000
Less: Accumulated depreciation - buildings 12,587,500
 Equipment 39,800,000
Less: Accumulated depreciation - equipment 7,875,000
Total plant assets

Land
12/31/22 3,000,000 6/1/23 1,000,000
04/01/23 2,200,000

12/31/23 Bal. 4,200,000

Buildings
12/31/22 26,500,000

12/31/23 Bal. 26,500,000

Equipment
12/31/22 40,000,000 05/01/23 600,000
07/01/23 1,100,000 12/31/23 700,000

12/31/23 Bal. 39,800,000

Accumulated Depreciation - Building

12/31/22 11,925,000
12/31/23 662,500

12/31/23 Bal. 12,587,500

Accumulated Depreciation - Equipment

05/01/23 440,000 12/31/22 5,000,000
12/31/23 700,000 05/01/23 20,000
12/31/23 70,000
12/31/23 3,925,000

12/31/23 Bal. 7,875,000

and depreciation

$3,000,000

$14,575,000

35,000,000
$52,575,000

n January 1, 2016.

d on December 31,

beginning balances,
buildings and
o salvage value; the
Update depreciation

a formula in cells with a "?" .

2,200,000

20,000

600,000
10,000
 1,000,000
600,000

1,100,000

70,000

700,000

3,925,000

662,500

$4,200,000

$13,912,500

$31,925,000
$50,037,500

1,000,000
 600,000
700,000

11,925,000
662,500

12,587,500

5,000,000
20,000
70,000
3,925,000

7,875,000

nd $1,300,000 respectively.

2,200,000
 20,000

600,000
8,000

1,000,000
300,000

1,100,000

70,000

700,000

3,925,000

17,500

$4,200,000

$13,912,500
 $31,925,000
$50,037,500

1,000,000

600,000
700,000

11,925,000
662,500

12,587,500

5,000,000
20,000
70,000
3,925,000

7,875,000