Question

Mohr Company purchases a machine for $26,000.00.using double declining balance method , what is the value at end of year 2

okmarks Window Help 5.66 GB 46% Fri 11:07 PM Q OE newconnect.mheducation.com Content Update Apple 1D Settings Content Institution Page Blackboard Learn Exam Some account services will not be available until you sign in again View 3 6 Saved Help Save &Exit Submit TB MC Qu. 08-130 A company purchased... 4 A company purchased a tract of land for its natural resources at a cost of $1,656.800. It expects to mine 2,060,000 tons of ore from this land. The salvage value of the land is expected to be $256,000. The depletion expense per ton of ore is: 0046 58 Multiple Choce $0.929 $0.804 $6.472 Net 14 of 20 <Prev & delete % 8 6 5 4

Answer 1

(1) Assuming useful life of machine purchased by Mohr Company to be 10 years,

Depreciation as per SLM=Cost/Useful Life = 26000/10= $2600.

Depreciation as per Double declining balance method= 2* Depreciation as per SLM

=2*2600= $5200

Therefore, Value at the end of year 2 = Cost - 2(Depreciation as per DDB Method)

= 26000-2(5200)

= $15600

(2) Depletion Expense per ton of ore = Cost of Land / Expected tons of ore

= 1656800/2060000

= $0.804