On April 1, 2010, SAS Corp Make the Necessary Adjusting Journal Entries at December 31, 2010

question 125

Essay

On April 1, 2010, SAS Corp. purchased and placed in service a plant asset. The following information is available regarding the plant asset:
$$\begin{array} { | l | r | } \hline \text { Acquisition cost } & \$ 130,000 \\\hline \text { Estimated salvage value } & \$ 15,000 \\\hline \text { Estimated useful life } & 5 \text { years } \\\hline\end{array}$$
Make the necessary adjusting journal entries at December 31, 2010 and December 31, 2010 to record depreciation for each year under the following depreciation methods:
a. Straight-line
b. Double-declining-balance.

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Definitions:

Total Leverage

A measure of a company's combined use of financial and operational leverage.

Operating Leverage

A financial measure of a firm's fixed versus variable costs, which assesses how revenue growth translates into growth in operating income.

Financial Leverage

The use of borrowed funds to increase the potential return on investment.

MM Model

The MM Model, or Modigliani-Miller Theorem, is a finance theory that suggests market value of a company is determined by its earning power and risk of underlying assets, independent of its capital structure.