Woodlawn Engineering Case Study
To: Agnes Currie, CFO
From: Group 28
Date: Monday November 21, 2011
Subject: Long-lived Assets
In response to you requested investigation regarding the property, equipment and intangible asset accounts, we have completed adjustments to the necessary accounts. During the year new office equipment was purchased at a cost of $2,697.50. We will calculate the difference between the accumulated Depreciation of office equipment balance and the office equipment account. We will then include the new office equipment to the balance, and then multiply the new balance by 20 percent using the declining-balance basis:
NOTE (a) Office equipment
DR. Depreciation Expense $4,740
CR. Accumulated Office Equipment Depreciation $4,740
Calculations:
($85,829.89 – $64,827.32) + $2,697.50
$21,002.57 + $2,697.50 = $23,700.07
Using the declining-balance basis at a rate of 20% per year gives us $4,740
The furniture and fixtures accounts will be relative to the office equipment journal entries. The difference between the accumulated depreciation of furniture and fixtures balance and the furniture and fixtures account will be considered. This will give us our net book value of our furniture and fixtures. We will then include the new purchases of furniture and fixtures of $4614.41 and multiply the sum of the net book value to the new purchases. Finally, this new value will be multiplied by 20 percent using the declining-balance basis
NOTE (b)
Furniture and Fixtures
DR. Depreciation Expense $25,563
CR. Accumulated Depreciation – Furniture and fixtures $25,563
Calculations:
$346,971.37 (2009) - $223,768.15 = $123,203.22 (Net Book Value)
$123,203.22 + $4,614.41 = $127,817.63 @ 20% = $25,563.26
The old business information system will be taken into consideration as we had received a loss due to harmful materials contained in the old materials. The journal entry for our loss will be as follows:
NOTE (c)
Business Information
From: Group 28
Date: Monday November 21, 2011
Subject: Long-lived Assets
In response to you requested investigation regarding the property, equipment and intangible asset accounts, we have completed adjustments to the necessary accounts. During the year new office equipment was purchased at a cost of $2,697.50. We will calculate the difference between the accumulated Depreciation of office equipment balance and the office equipment account. We will then include the new office equipment to the balance, and then multiply the new balance by 20 percent using the declining-balance basis:
NOTE (a) Office equipment
DR. Depreciation Expense $4,740
CR. Accumulated Office Equipment Depreciation $4,740
Calculations:
($85,829.89 – $64,827.32) + $2,697.50
$21,002.57 + $2,697.50 = $23,700.07
Using the declining-balance basis at a rate of 20% per year gives us $4,740
The furniture and fixtures accounts will be relative to the office equipment journal entries. The difference between the accumulated depreciation of furniture and fixtures balance and the furniture and fixtures account will be considered. This will give us our net book value of our furniture and fixtures. We will then include the new purchases of furniture and fixtures of $4614.41 and multiply the sum of the net book value to the new purchases. Finally, this new value will be multiplied by 20 percent using the declining-balance basis
NOTE (b)
Furniture and Fixtures
DR. Depreciation Expense $25,563
CR. Accumulated Depreciation – Furniture and fixtures $25,563
Calculations:
$346,971.37 (2009) - $223,768.15 = $123,203.22 (Net Book Value)
$123,203.22 + $4,614.41 = $127,817.63 @ 20% = $25,563.26
The old business information system will be taken into consideration as we had received a loss due to harmful materials contained in the old materials. The journal entry for our loss will be as follows:
NOTE (c)
Business Information