Question

This problem continues our accounting for Aqua Elite, Inc. from Chapter 7. During 2014, Aqua Elite made the following purchases:
• On May 3, Aqua Elite, Inc. purchased a copy machine for $4,700 cash. The copy machine has an estimated useful life of four years and no salvage value. Aqua Elite uses double-declining balance depreciation for the copy machine.
• On May 18, Aqua Elite, Inc. purchased a $31,000 truck financed by a note payable bearing 8% annual interest. The truck has an estimated useful life of 200,000 kilometers and a residual value of $3,000. The truck was driven 28,000 kilometers in 2014 and is depreciated using the units-of-production method.
• On June 2, Aqua Elite, Inc. paid $15,000 for land.
• On June 22, $3,300 of furniture was purchased on account. The furniture has a five-year life and a residual value of $500. Furniture is depreciated using straight-line depreciation.
• On August 10, $1,200 of furniture was purchased. The furniture has a four-year life and no residual value, and is depreciated using straight-line depreciation.
• On September 1, Aqua Elite, Inc. purchased a building for $85,000 financed by a mortgage bearing 6% annual interest. The building has an estimated salvage value of $10,000 and is being depreciated over 25 years using the straight-line method.
Requirements
1. Calculate the depreciation expense as of December 31, 2014, for all assets purchased in 2014.
2. Assuming these are Aqua Elite’s only assets, how will fixed assets be reflected on the balance sheet at December 31, 2014?


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  • CreatedJuly 08, 2015
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