Homework SourseJournalize these transactions Elastoplast Gmbh trades an old
Journalize these transactions:
Elastoplast Gmbh trades an old piece of equipment for a commercial vehicle with a current market value of $75,000. The equipment was bought 5 years ago for $62,000 and was assigned a useful life of 8years ( residual value $2000); the company uses double declining depreciation. In addition to trading in the old equipment, Elastoplast pays the supplier of the vehicle $55,000 in cash
Journalize these transactions:
Elastoplast Gmbh trades an old piece of equipment for a commercial vehicle with a current market value of $75,000. The equipment was bought 5 years ago for $62,000 and was assigned a useful life of 8years ( residual value $2000); the company uses double declining depreciation. In addition to trading in the old equipment, Elastoplast pays the supplier of the vehicle $55,000 in cash
Elastoplast Gmbh trades an old piece of equipment for a commercial vehicle with a current market value of $75,000. The equipment was bought 5 years ago for $62,000 and was assigned a useful life of 8years ( residual value $2000); the company uses double declining depreciation. In addition to trading in the old equipment, Elastoplast pays the supplier of the vehicle $55,000 in cash
Solution
DDB Rate= 2 *St.line Rate Useful life= 8 yrs. So, st.line rate=100/8= 12.5% DDB Rate= 2 *12.5%= 25% on the declining balance Year Depn. For the Yr. Acc. Depn.as at end of Yr. Carrying value 0 62000 1 15500 15500 46500 2 11625 11625 34875 3 8719 8719 26156 4 6539 6539 19617 5 4904 4904 14713 Total 47287 Exchange has commercial substance New Equipment 75000 Accumulated depreciation 47287 Old Equipment 62000 Cash 55000 Gain on Exchange(Bal.Fig.) 5287 Exchange lacks commercial substance New Equipment(75000-5287) 69713 Accumulated depreciation 47287 Old Equipment 62000 Cash 55000
