Question

Presented below is information related to Splish Manufacturing Corporation. Estimated Life (in years) Asset Estimated Salvage $6,400 Cost А. $44,300 10 B 34,000 5,200 9 C 35,000 4,400 9 D 19,700 2,200 7 E 24,600 3,000 6 Compute the rate of depreciation per year to be applied to the plant assets under the composite method. (Round answer to 2 decimal place, e.g. 4.83%.) Composite rate

Answer 1

Solution

Composite rate of Depreciation =

10.46%

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Requirement 2

Account Titles and Explanation	Debit	Credit
Depreciation Expense-Plant Asset	$      16,490.00
Accumulated Depreciation-Plant Asset		$    16,490.00
(Depreciation charged @10.46% on composite Assets)

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Requirement 3

Account Titles and Explanation	Debit	Credit
Cash	$        5,500.00
Accumulated Depreciation-Plant Assets	$      14,200.00
D Asset		$    19,700.00
(Sale of asset D and difference booked as Accumulated Depreciation)

Working

Assets	Original Cost	Salvage Value	Depreciable value	Depreciable Life	SL Depreciation per Year
A	$      44,300.00	$      6,400.00	$       37,900.00	10	$      3,790.00
B	$      34,000.00	$      5,200.00	$       28,800.00	9	$      3,200.00
C	$      35,000.00	$      4,400.00	$       30,600.00	9	$      3,400.00
D	$      19,700.00	$      2,200.00	$       17,500.00	7	$      2,500.00
E	$      24,600.00	$      3,000.00	$       21,600.00	6	$      3,600.00
Total	$    157,600.00	$    21,200.00	$     136,400.00	-	$    16,490.00

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In case of sale of asset which is depreciated under composite method, no Profit or loss is booked and the diffrence is booked as Accumulated depreciation.