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On March 31, 2021, the Herzog Company purchased a factory complete with vehicles and equipment. The allocation...

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Accounting

On March 31, 2021, theHerzog Company purchased a factory complete with vehicles andequipment. The allocation of the total purchase price of $950,000to the various types of assets along with estimated useful livesand residual values are as follows:

AssetCostEstimated Residual ValueEstimated Useful
Life (in years)
Land$125,000N/AN/A
Building450,000none20
Equipment250,00012%of cost10
Vehicles125,000$13,00010
Total$950,000


On June 29, 2022, equipment included in the March 31, 2021,purchase that cost $95,000 was sold for $75,000. Herzog uses thestraight-line depreciation method for building and equipment andthe double-declining-balance method for vehicles. Partial-yeardepreciation is calculated based on the number of months an assetis in service.

Required:

1.Compute depreciation expense on the building, equipment, andvehicles for 2021.
2. Prepare the journal entries to record thedepreciation on the equipment sold on June 29, 2022, and the saleof equipment.
3. Compute depreciation expense on the building,remaining equipment, and vehicles for 2022.

Answer & Explanation Solved by verified expert
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1Depreciation cost of asset salvage value life ofassetAssetCostEstimated Residual ValueEstimated Useful Life in    See Answer
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