Bulletin HASKINS & SELLS
copies of reports which have been rendered
description of each item eliminated.
Solution to Depreciation Problem :
THE vessel should first be set up as
of January 1, 1914, at a cost of
Date. Dr. Cr.
Jan. 1 Cost of Property $60,000.00
To record the purchase
of one ship having
an estimated further
life of eight years.
The amount of depreciation per year,
based on the estimated life, was $7,500.00.
In the course of four years, extending from
January 1, 1914, to December 31, 1917,
the amount of the reserve accumulated for
depreciation should have been $30,000.00.
Instead of such amount, it appears that
only $19,000.00 had been set up in the
reserve. On the basis of revaluation, the
amount of depreciation chargeable up to
December 31, 1917, being the difference
between the cost and residual value, should
have been $50,000.00. Deducting from
this the $19,000.00 leaves $31,000.00 as
the amount to be written off. A part of
this amount should be charged against surplus.
Whether or not any part should be