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
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Finally, our net book value in 2010 will be $122,050.10, which is the difference between the new 2010 leasehold improvement and the accumulated depreciation of leasehold improvements:
NOTE (d)
Leasehold Improvements
DR. Depreciation Expense $12,205
CR. Accumulated Depreciation – Leasehold improvements $12,205
Calculations: To reconcile the accounts as at August 31/09:
(2008) $86,688.78/10(Years useful life) = $8,668.88(Accumulated Depreciation)
(2009) $86,688.78 - $8,688.88 = $78019.90 + $21,455.15(2009 Expense) = $99,475.05 $99,475.05/9(Remaining years of useful life) = $11,052.78(Accumulated Depreciation)
(2010) $99,475.05 - $11,052.78 = $88,422.27 + $45,832.84 (2010 Expense) = $134,255.11 $134,255.11/11(New remaining years of useful life)
= $12,205.01(Accumulated Depreciation) = $134,255.11 - $12,205.01 = $122,050.10 (Net Book Value)
There is no need to make a journal entry for the 2,500 spent on disposing of capital assets because it was correctly recorded as a Repairs and Maintenance expense.
Financial Statement Values:
Below are financial statement captions and related amounts that will appear on the balance sheet and income statement for property and equipment and intangible assets:
NOTE Unadjusted Adjusted August
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