Chapter 3
Long-Term Assets
133
AP-19B (
3
)
On January 1, 2013, Cutie Company purchased a piece of equipment for $90,000 and depreciated
it by using the straight-line method. The company estimated that the equipment had a useful life
of eight years with no residual value. On January 1, 2016, Cutie determined that the equipment
only had a useful life of six years from the date of acquisition with no residual value.
Calculate the accumulated depreciation as of December 31, 2016. Explain why the yearly
amortization for 2016 is different from the three preceding years.
AP-20B (
3
4
)
On January 1, 2014, a company purchased equipment for $22,400. It is expected to last for
four years and have a residual value of $9,600. The equipment is donated to a local charity on
December 31, 2016 and valued at $12,800. Prepare the journal entry required to record the
donation. The company uses straight‐line depreciation.
Date
Account Title and Explanation
Debit
Credit
