Accounting Fundamental - exercise on Fixed Assets
Exercises on Fixed Asset depreciation and disposal
Mi Mi opens an Ice cream store; she purchase a refrigerator for $6,500 which has an economic life of 10 years. She adopts the straightline method to depreciate the fixed asset of refrigerator. She expects that the refrigerator will have a disposal value of $500 at the end of its economic life.
Tasks
1. Calculate the depreciation and net book value of the refrigerator at the end of year 1 and year 2; show the respective double entries.
2. At mid-year 3, Mi Mi decides to retire; she sells the refrigerator at $$700. Calculate the profit/loss on the disposal of the refrigerator, and show the respective double entries.
3. Try to perform task 1, using reducing balance method for year 1 and year 2.
Mi Mi opens an Ice cream store; she purchase a refrigerator for $6,500 which has an economic life of 10 years. She adopts the straightline method to depreciate the fixed asset of refrigerator. She expects that the refrigerator will have a disposal value of $500 at the end of its economic life.
Tasks
1. Calculate the depreciation and net book value of the refrigerator at the end of year 1 and year 2; show the respective double entries.
2. At mid-year 3, Mi Mi decides to retire; she sells the refrigerator at $$700. Calculate the profit/loss on the disposal of the refrigerator, and show the respective double entries.
3. Try to perform task 1, using reducing balance method for year 1 and year 2.
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