Question 4
A machine was acquired on January 1, 2015, at a cost of $80,000. The machine was originally estimated to have a residual value of $5,000 and an estimated life of 5 years. The machine is expected to produce a total of 100,000 components during its life, as follows: 15,000 in 2015, 20,000 in 2016, 20,000 in 2017, 30,000 in 2018, and 15,000 in 2019.
Instructions
(a) Calculate the amount of depreciation to be charged each year, using each of the following methods:
1. Straight-line method
2. Units-of-production
3. Double diminishing-balance
(b) Which method results in the highest depreciation expense during the first two years? Over all five years?
Question 5
Certossi Service Ltd. uses straight-line depreciation. The company's fiscal year end is December 31. The following transactions and events occurred during their first three years of operations:
2014 Jul 1 Purchased equipment for $32,000 cash, with shipping costs of $2,000.
Nov 3 Incurred ordinary repairs on the computer of $360.
Dec 31 Recorded 2014 depreciation on the basis of a four-year life and estimated residual value of $200.
2015 Dec 31 Recorded 2015 depreciation.
2016 Jan 1 Paid $1,600 for a major upgrade of the equipment. This expenditure is expected to increase the operating efficiency and capacity of the equipment.
Instructions
Prepare journal entries to record the above events. (Show calculations.)
Question 6
Comparative statements of financial position for Campbell Inc. appear below:
CAMPBELL INC.
Comparative Statements of Financial Position
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Assets
Dec. 31, 2016 Dec. 31, 2015
Cash $ 29,000 $10,000
Accounts receivable 28,000 19,000
Prepaid expenses 9,000 12,000
Merchandise inventory 37,000 27,000
Long-term investments 35,000 53,000
Equipment 75,000 48,000
Accumulated depreciation—equipment (26,000) (22,000)
Total assets $187,000 $174,000
Liabilities and Shareholders' Equity
Accounts payable $ 21,000 $ 9,000
Mortgage payable 37,000 45,000
Common shares 40,000 23,000
Retained earnings 89,000 97,000
Total liabilities and shareholders' equity $187,000 $174,000
Additional information regarding fiscal 2016:
1. Profit for the year was $27,000.
2. Cash dividends of $13,000 were declared and paid during the year.
3. Long-term investments with a carrying amount of $53,000 were sold for $48,000 cash.
Instructions
Using the indirect method, prepare a statement of cash flows for the year ended December 31, 2016.
Question - 4.
Answer
b. Double declining balance method has highest depreciation for two years i.e $ 51,200.
Question 4 A machine was acquired on January 1, 2015, at a cost of $80,000. The...
Question 6 Comparative statements of financial position for Campbell Inc. appear below: CAMPBELL INC. Comparative Statements of Financial Position ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Assets Dec. 31, 2016 Dec. 31, 2015 Cash $ 29,000 $10,000 Accounts receivable 28,000 19,000 Prepaid expenses 9,000 12,000 Merchandise inventory 37,000 27,000 Long-term investments 35,000 53,000 Equipment 75,000 48,000 Accumulated depreciation—equipment (26,000) (22,000) Total assets $187,000 $174,000 Liabilities and Shareholders' Equity Accounts payable ...
5. A machine was acquired on January 1, 2018, at a cost of $80,000. The machine was originally estimated to have a residual value of $5,000 and an estimated life of 5 years. The machine is expected to produce a total of 100,000 components during its life, as follows: 15,000 in 2018, 20,000 in 2019, 20,000 in 2020, 30,000 in 2021, and 15,000 in 2022. (25 marks) Instructions (a) Calculate the amount of depreciation to be charged each year, using...
5. A machine was acquired on January 1, 2018, at a cost of $80,000. The machine was originally estimated to have a residual value of $5,000 and an estimated life of 5 years. The machine is expected to produce a total of 100,000 components during its life, as follows: 15,000 in 2018, 20,000 in 2019, 20,000 in 2020, 30,000 in 2021, and 15,000 in 2022. (25 marks) Instructions (a) Calculate the amount of depreciation to be charged each year, using...
Problem 11-11 (Part Level Submission) On January 1, 2015, a machine was purchased for $97,200. The machine has an estimated salvage value of $6,480 and an estimated useful life of 5 years. The machine can operate for 108,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2015, 21,600 hrs; 2016, 27,000 hrs; 2017, 16,200 hrs; 2018, 32,400 hrs; and 2019, 10,800 hrs. (a) Compute the annual depreciation...
On January 1, 2015, a machine was purchased for $101,700. The machine has an estimated salvage value of $6,780 and an estimated useful life of 5 years. The machine can operate for 113,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2015, 22,600 hrs; 2016, 28,250 hrs; 2017, 16,950 hrs; 2018, 33,900 hrs; and 2019, 11,300 hrs.Please show calculations for all problems below. 1) Compute the annual...
On January 1, 2015, a machine was purchased for $96,300. The machine has an estimated salvage value of $6,420 and an estimated useful life of 5 years. The machine can operate for 107,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2015, 21,400 hrs; 2016, 26,750 hrs; 2017, 16,050 hrs; 2018, 32,100 hrs; and 2019, 10,700 hrs. Compute the annual depreciation charges over the machine’s life assuming...
9) 9) Dersch Co. purchased a machine on January 1, 2014, for $1,500,000. Using the table below, calculate the annual depreciation expense for each year of the machine's life (estimated at 5 years or 50,000 hours with a residual value of $150,000). During the machine's life it was used 15,000; 14,000; 10,000; 9,000; and 6,000 hours. Straight Line Units of Production Declining Balance Year 2014 2015 2016 2017 2018
Problem 11-11 On January 1, 2015, a machine was purchased for $90,900. The machine has an estimated salvage value of $6,060 and an estimated useful life of 5 years. The machine can operate for 101,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2015, 20,200 hrs; 2016, 25,250 hrs; 2017, 15,150 hrs; 2018, 30,300 hrs; and 2019, 10,100 hrs. Compute the annual depreciation charges over the machine’s...
Problem 11-11 On January 1, 2015, a machine was purchased for $90,900. The machine has an estimated salvage value of $6,060 and an estimated useful life of 5 years. The machine can operate for 101,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2015, 20,200 hrs; 2016, 25,250 hrs; 2017, 15,150 hrs; 2018, 30,300 hrs; and 2019, 10,100 hrs. Compute the annual depreciation charges over the machine’s...
On January 1, 2015, a machine was purchased for $100,800. The machine has an estimated salvage value of $6,720 and an estimated useful life of 5 years. The machine can operate for 112,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2015, 22,400 hrs; 2016, 28,000 hrs; 2017, 16,800 hr Your answer is partially correct. Try again. Compute the annual depreciation charges over the machine's life assuming...