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White Beach Resort has the following assets as of December 31, 2024:

Date Aquired Useful Life Cost Salvage Value

Building January 1, 2022 10 years P8,000,000 P 750,000

Furniture and Fixture July 1, 2023 5 years 350,000 25,000

Equipment March 1, 2024 8 years 950,000 50,000



a. Adjusting entries to record depreciation on year;



2022;





2023;





2024;

1 Answer

2 votes

Final answer:

Depreciation for White Beach Resort's assets is calculated using the straight-line method for the Building, Furniture and Fixtures, and Equipment. The adjusting entries for 2022, 2023, and 2024 reflect different amounts of depreciation expense based on the assets' acquisition dates, useful lives, and salvage values with no depreciation for some assets in certain years due to their acquisition dates.

Step-by-step explanation:

To calculate depreciation for the assets of White Beach Resort, we will use the straight-line method of depreciation, which allocates the cost of an asset evenly over its useful life. The formula for straight-line depreciation is (Cost - Salvage Value) / Useful Life.

Depreciation for the Building asset:

Year 2022:
Depreciation expense = (P8,000,000 - P750,000) / 10 years = P725,000

Adjusting entry for 2022:
Debit Depreciation Expense - Building P725,000
Credit Accumulated Depreciation - Building P725,000

Depreciation for Furniture and Fixtures asset:

Year 2022:
No depreciation (acquired July 1, 2023)

Year 2023 (from July 1 to December 31 - 6 months):
Depreciation expense = (P350,000 - P25,000) / 5 years / 2 = P32,500

Adjusting entry for 2023:
Debit Depreciation Expense - Furniture and Fixtures P32,500
Credit Accumulated Depreciation - Furniture and Fixtures P32,500

Depreciation for Equipment asset:

Year 2022:
No depreciation (acquired March 1, 2024)

Year 2023:
No depreciation (acquired March 1, 2024)

Year 2024 (from March 1 to December 31 - 10 months):
Depreciation expense = (P950,000 - P50,000) / 8 years * 10/12 = P89,583.33

Adjusting entry for 2024:
Debit Depreciation Expense - Equipment P89,583.33
Credit Accumulated Depreciation - Equipment P89,583.33

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