Practice 11 The company ntial pool of assets on which the gr

Practice 11 The company ntial pool of assets on which the group depreciation rate is based is as follows has decided to use group depreciation based on the straight-line depreciation method Theie 1 Acquisition Salvage Asset 1 Asset 2 Asset 3 Asset 4 CostValue 64000 $ 4.0006 yen 90000 10000 420006000 11-16 0.000

Solution

Asset

Cost of the Asset

Salvage Value

Depreciable value

Useful Life

Depreciation per year

Asset 1

$64,000

$4,000

$60,000

6

$10,000

Asset 2

$90,000

$10,000

$80,000

10

$8,000

Asset 3

$42,000

$6,000

$36,000

9

$4,000

Asset 4

$30,000

-

$30,000

5

$6,000

TOTAL

$2,26,000

$20,000

$2,06,000

$28,000

Composite Rate of Depreciation = [Total Depreciation Expense / Total Cost of the asset] x 100   

= [$28,000 / 226,000] x 100

= 12.39% [Rounded to 2 Decimal places]

Journal Entry to record Depreciation Expense for the year

Account Titles and Explanation

Debit ($)

Credit($)

Depreciation Expense A/c

28,000

To Accumulated Depreciation A/c

28,000

[Entry To record depreciation for the year]

Asset	Cost of the Asset	Salvage Value	Depreciable value	Useful Life	Depreciation per year
Asset 1	$64,000	$4,000	$60,000	6	$10,000
Asset 2	$90,000	$10,000	$80,000	10	$8,000
Asset 3	$42,000	$6,000	$36,000	9	$4,000
Asset 4	$30,000	-	$30,000	5	$6,000
TOTAL	$2,26,000	$20,000	$2,06,000		$28,000