You are the Licensee-In-Charge of Hope & Murphy Real Estate and wish to purchase computers for your new office in the CBD.
Using the information below:
- Calculate the depreciation using the Straight-Line Method/Prime Cost
- Prepare Journal entries
Office fit out $120,000
Assets effective Life 4 years
Purchase Date 1st July
STRAIGHT-LINE METHOD CALCULATION
Years 1 to 4 – JOURNAL ENTRIES
| DEPRECIATION DEBIT CREDIT | ||
| Year One | Depreciation Expense | |
| Accumulated Depreciation | ||
| Depreciation Expense – Year One | ||
| Year Two | Depreciation Expense | |
| Accumulated Depreciation | ||
| Depreciation Expense – Year Two | ||
| Year Three | Depreciation Expense | |
| Accumulated Depreciation | ||
| Depreciation Expense – Year Three | ||
| Year Four | Depreciation Expense | |
| Accumulated Depreciation | ||
| Depreciation Expense – Year Four |
Using the same information as above:
- Calculate the depreciation using the Diminishing Value Method
- Prepare Journal entries
DIMINISHING VALUE METHOD
| Year | Amount | Days Held | Depreciation Rate | Depreciation Amount | Closing Balance |
| Year 1 | |||||
| Year 2 | |||||
| Year 3 | |||||
| Year 4 | |||||
JOURNAL ENTRIES
| DEPRECIATION DEBIT CREDIT | ||
| Year One | Depreciation Expense | |
| Accumulated Depreciation | ||
| Depreciation Expense – Year One | ||
| Year Two | Depreciation Expense | |
| Accumulated Depreciation | ||
| Depreciation Expense – Year Two | ||
| Year Three | Depreciation Expense | |
| Accumulated Depreciation | ||
| Depreciation Expense – Year Three | ||
| Year Four | Depreciation Expense | |
| Accumulated Depreciation | ||
| Depreciation Expense – Year Four |
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