Question

Ocean Fishers Lid had a 22-foot fishing boat with an inboard motor that was purchased on April 9, 2009 for $75,000. The PPE Sub ledger shows the following information regarding the boat Fishing Boat - 22 Foot With Inboard Motor Date of Component Deprec Purchase Method Fibreglass body A pr 900 SC Apr 9109 Cost $ 18,000 57.000 Est Residual 3000 Est Life 15 y 10 y $75.000 On June 27. 2017, 503,000 cash was paid for a new motor 10 replace the old one, which was scrapped. The new motor had an estimated useful life of 12 years and a residual value of $5,000. Early in 2017 was determined that the useful life of the boat's fibreglass body should be adjusted to a total of 20 years with no change in the residual value. Required: 1. Record the appropriate entries regarding the a. Purchase of the replacement motor on June 27, 2017. (if no entry is required for a transaction, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet

Answer 1

Please Find Solution Below:-

Date	Journal	Debit	Credit
Jun-17	Depreciation on Old Motor A/c	2850
	Loss on Old Motor A/c	9975
	Old Motor A/c		12825
	(Being Old motor replaced in June 17)
Jun-17	New Motor A/c	63000
	Cash A/c		63000
	(Being New Motor Purchased)
Dec-17	Depreciation on New Motor A/c	2500
	To New Motor A/c		2500
	(Being Depreciation Charged on New Motor)
Dec-17	Depreciation on Fibre glass Body A/c	362.5
	To Fibre glass Body A/c		362.5
	(Depreciation Charged on the Fibre Glass body as per the Below Calculation)
	Calculation of Depreciation on Fibre Glass Body
	Book Value as on Jan 2017	10,250.00
	Residual Value	3000
	Depreciable value	7,250.00
	Revised Life for Depreciation	20
	Depreciation Amount annually	362.5

	Calculation of Depreciation on Fibre Glass Body
	Book Value as on Jan 2017	10,250.00
	Residual Value	3000
	Depreciable value	7,250.00
	Revised Life for Depreciation	20
	Depreciation Amount annually	362.5