LATIHAN CHAPTER 9-PPE

SOAL 1
Marlow Company purchased equipment on January 1, 2011 for $90,000. It is estimated that the
equipment will have a $5,000 salvage value at the end of its 5-year useful life. It is also
estimated that the equipment will produce 100,000 units over its 5-year life.
Instructions
Answer the following independent questions.
1. Compute the amount of depreciation expense for the year ended December 31, 2011, using
the straight-line method of depreciation.
2. If 16,000 units of product are produced in 2011 and 24,000 units are produced in 2012,
what is the book value of the equipment at December 31, 2012? The company uses the
units-of-activity depreciation method.
3. If the company uses the double-declining-balance method of depreciation, what is the
balance of the Accumulated Depreciation—Equipment account at December 31, 2013?

SOAL 2.
(a) Payne Company purchased equipment in 2005 for $150,000 and estimated a $10,000
salvage value at the end of the equipment's 10-year useful life. At December 31, 2011,
there was $98,000 in the Accumulated Depreciation account for this equipment using the
straight-line method of depreciation. On March 31, 2012, the equipment was sold for
$40,000.
Prepare the appropriate journal entries to remove the equipment from the books of Payne
Company on March 31, 2012.
(b) Judson Company sold a machine for $15,000. The machine originally cost $35,000 in 2009
and $8,000 was spent on a major overhaul in 2012 (charged to Machine account).
Accumulated Depreciation on the machine to the date of disposal was $28,000.
Prepare the appropriate journal entry to record the disposition of the machine.
(c) Donahue Company sold office equipment that had a book value of $12,000 for $16,000.
The office equipment originally cost $40,000 and it is estimated that it would cost $50,000
to replace the office equipment.
Prepare the appropriate journal entry to record the disposition of the office equipment.

SOAL 3
Koch Company owns equipment that cost $120,000 when purchased on January 1, 2009. It has
been depreciated using the straight-line method based on estimated salvage value of $15,000
and an estimated useful life of 5 years.
Instructions
Prepare Koch Company's journal entries to record the sale of the equipment in these four
independent situations.
(a) Sold for $58,000 on January 1, 2012.
(b) Sold for $58,000 on May 1, 2012.
(c) Sold for $32,000 on January 1, 2012.
(d) Sold for $32,000 on October 1, 2012.
SOAL 4
Presented below are two independent situations:
(a) Waner Company exchanged an old machine (cost $150,000 less $90,000 accumulated
depreciation) plus $10,000 cash for a new machine. The old machine had a fair value of
$54,000. Prepare the entry to record the exchange of assets by Waner Company.
(b) Fisher Company trades old equipment (cost $90,000 less $54,000 accumulated deprecia-
tion) for new equipment. Fisher paid $36,000 cash in the trade. The old equipment that
was traded had a fair value of $54,000. Prepare the entry to record the exchange of assets
by Fisher Company. The transaction has commercial substance.

SOAL 5
Hanshew's Lumber Mill sold two machines in 2013. The following information pertains to the
two machines:
Purchase Useful Salvage Depreciation Sales
Machine Cost Date Life Value Method Date Sold Price
#1 $66,000 7/1/09 5 yrs. $6,000 Straight-line 7/1/13 $15,000
#2 $50,000 7/1/12 5 yrs. $5,000 Double-declining- 12/31/13 $30,000
balance

Instructions
(a) Compute the depreciation on each machine to the date of disposal.
(b) Prepare the journal entries in 2013 to record 2013 depreciation and the sale of each
machine.

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