instead of repairing the shop hoist at a cost of 910 the hois, which has a 1 yr useful life remaining is overhauled at a cost of 2950. The overhaul will be charged to the accum deprec and extend the useful life to 4 yrs#2 - sold obsolete store equip for 530 cash, the equip originally cost 925 and depreciation to march 31 of this year (end of 1st quarter) is 675, the asses depreciates on a straight line basis at a rate of 25/month (current date = June 10)
why are you asking us to do your homework? stop being lazy and get to work!
#1 - instead of repairing the shop hoist at a cost of 910 the hoist, which has a 1 yr useful life remaining is overhauled at a cost of 2950. The overhaul will be charged to the accum deprec and extend the useful life to 4 yrs Why is the cost of the overhaul charged to accd depn? If it will extend the life of the asset, it is an improvement and shd be capitalised: Dr Hoist 2,950 Cr Cash or AP 2,950 #2 - sold obsolete store equip for 530 cash, the equip originally cost 925 and depreciation to march 31 of this year (end of 1st quarter) is 675, the asset depreciates on a straight line basis at a rate of 25/month (current date = June 10) If it has been depreciated to Mar 31, you need to depreciate another 2 mths to May 31 (I wouldn't bother with the 10 days in June), so Dr Depn 50 Cr Accd depn 50 That will bring the accd depn up to 725. If cost is 925, that makes nbv $200. If u sold it for 530 that gives u a gain of 330. Dr Accd depn 725 Dr Cash 530 Cr Equip at cost 925 Cr Gain on disposal of equip 330
