Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 92

Determine depreciation method used and date of asset acquisition; record disposal of asset The balance sheets of Tully Corp. showed the following at December 31, 2011, and 2010:

	December 31, 2011	December 31, 2010
Machine, less accumulated depreciation
of $80,000 at December 31, 2011, and
$50,000 at December 31, 2010.	$60,000	$90,000

Required:

a. If there have not been any purchases, sales, or other transactions affecting this machine account since the machine was first acquired, what is the amount of depreciation expense for 2011?

---

b. Assume the same facts as in part a, and assume that the estimated useful life of the machine is four years and the estimated salvage value is $20,000. Determine

1. What the original cost of the machine was.

2. What depreciation method is apparently being used. Explain your answer.

3. When the machine was acquired.

---

c. Assume that the machine is sold on December 31, 2011, for $47,200. Use the horizontal model (or write the journal entry) to show the effect of the sale of the machine.

Step 1 of 8

Depreciation: It is a method of assigning the tangible asset’s cost over its estimated useful life.