ACCOUNTING

ACCOUNTING

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BE9-3 Conlin Company acquires a delivery truck at a cost of $42,000.The truck is expected to

have a salvage value of $6,000 at the end of its 4-year useful life. Compute annual depreciation

for the first and second years using the straight-line method.

BE9-4 Ecklund Company purchased land and a building on January 1, 2011. Management’s

best estimate of the value of the land was $100,000 and of the building $200,000. But management

told the accounting department to record the land at $220,000 and the building at $80,000.

The building is being depreciated on a straight-line basis over 20 years with no salvage value.

Why do you suppose management requested this accounting treatment? Is it ethical?

BE9-5 Depreciation information for Conlin Company is given in BE9-3. Assuming the

declining-balance depreciation rate is double the straight-line rate, compute annual depreciation

for the first and second years under the declining-balance method.

BE9-9 Prepare journal entries to record the following.

(a) Gomez Company retires its delivery equipment, which cost $41,000. Accumulated depreciation

is also $41,000 on this delivery equipment. No salvage value is received.

(b) Assume the same information as (a), except that accumulated depreciation is $39,000, instead

of $41,000, on the delivery equipment.