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AC 2799 Week 4 Depreciation - Exercise 4.1




Question;Exercise 4.1Goods Sold and DepreciationDepreciation:Calculate the annual depreciation for the following assets for the entire lifespan of each asset. Each asset will have adifferent method to utilize. In addition, complete the applicable journal entries for each asset for tax year 2012 andsubmit on the Journal Entry template. This information will also be used in the summation of the project but is onlygraded one time.Land: 58 acres valued at $172,000, inherited, currently in year three.Building: Built in 2009started to use on 1/1/2010, basis $225,000, residual value $10,000, 30-year lifeuses straight-line depreciationcurrently in year two.2010 Equipment 2: Straight line cost $12,000, $2,000 residual value, five-year lifepurchased 10/1/2011,currently in year two.2009 TruckSum of Years Digit: Cost $24,000, no residual value, five years, purchased and started usingon 1/1/2012currently year one.Back HoeUnits Of Production: Cost $8,000, no residual value, total use hours 10,000 or six years, usedof 2500 hours in 2012started using on 1/1/2012currently in year one.TrailerDouble Declining Balance: Cost $4,000, no residual value, five-year lifestarted to use6/1/2011currently in year two.Cost of Goods Sold:Calculate the cost of goods sold using LIFO for the trees, bushes, and mulch independently using the followinginformation. Use those cumulative amounts to calculate the gross income for 2012.Trees:2012 Annual sales of 6430 unitsEnding Inventory is 1825 unitsUnitsUnit CostBeginning Inventory389545$175,275Purchase 1291043$125,130Purchase 295046$43,700Purchase 3- Dec50040$20,000Bushes:2012 Annual sales of 5175 unitsEnding Inventory is 13501Total CostGoods Sold and DepreciationUnitsUnit CostTotal CostBeginning Inventory157540$63,000Purchase 1275035$96,250Purchase 2100040$40,000Purchase 3- Dec20035$7,000Purchase 4- Dec100030$30,000UnitsUnit CostTotal CostMulch:2012 annual sales of 3475 unitsEnding inventory is 1775Beginning Inventory18$29,700Purchase 1110021$23,100Purchase 2140021$29,400Purchase 360024$14,400Purchase 4- Dec2650150020$30,000


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