ACCT 101 SEU Straight Line Depreciation Common Depreciation Method Question

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College of Administration and Finance Sciences
Assignment (3)
Deadline: Saturday 27/11/2021 @ 23:59
Course Name: Principles of
Accounting
Student’s Name: noura alshayea
Course Code: ACCT101
Student’s ID Number: 200102751
Semester: 1st
CRN: 12638
Academic Year: 1443 H
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
/5
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism.
• Submissions without this cover page will NOT be accepted.
College of Administration and Finance Sciences
Assignment Question(s):
(Marks 5)
Q1- On your own words, describe the methods that companies can implement to depreciate plant
assets. (2 Marks).
Companies can use one of the four depreciation methods listed below to depreciate plant
assets:
1. Straight Line Approach: This method requires determining the asset’s expected usable life
and the residual values at the end of that life. The salvage value is subsequently removed from
the asset’s original cost. The remaining amount represents the asset’s depreciable cost, which is
evenly amortized over its useful life by dividing the accumulated depreciation cost by the
expected useful life in years.
2. Declining Balance Technique: In this method, an asset is depreciated each year at a defined
rate based on its current book value. It is an accelerated depreciation system that records
higher accumulated depreciation in the early years of an asset’s life and lower depreciation
expense in the later years of the asset’s life.
3. Year Count The digit technique is also an accelerated depreciation method for amortizing
asset costs over their useful lives. It’s beneficial in a variety of situations.
Q2- On June 1, 2020, ABC Company signed a $25,000, 120-day, 6% note payable to cover a past
due account payable.
a. What is the total amount of interest to be paid on this note?
b. Prepare ABC Company’s general journal entry to record the issuance of the note payable
c. Prepare ABC Company’s general journal entry to record the payment of the note on
September 29, 2020 (2 marks)
College of Administration and Finance Sciences
a.
interest = 25,000 * 6% * 120/360 = 500
b.
June 1, 2020
AP
Dr.
Cr.
25,000
Notes Payable
25,000
To record the issuance of the note payable
c.
September 29, 2020
Notes Payable
Dr.
Cr.
25,000
Interest Expense
500
Cash
25,500
Q3. What are the differences between sole proprietorship and corporation? (1 mark).
Sole proprietorship: • An individual owns a business; • The owner retains ownership to assets and
income; • The owner bears unlimited liability; • The business is terminated when the owner dies or
when the owner chooses to do so.
• A corporation is a legal entity that operates independently of its owners.
• Corporations can sue, be sued, buy, sell, and possess property. • Shareholders (owners) oversee the
corporation’s direction and policies, frequently through an elected board of directors.
• Shareholder responsibility is limited to the amount invested in the company; • The life of the
corporation is not dependent on the owners… After ownership is transferred by sale or inheritance,
the corporation is still managed by its manager
College of Administration and Finance Sciences

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Explanation & Answer:
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Tags:
depreciation method

Straight line depreciation

amount of expense

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