A new machine costs $120,000, has an estimated useful life of five years and an estimated...

Question

Question

A new machine costs $120,000, has an estimated useful life of five years and an estimated salvage value of $15,000 at the end

business accounting

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Given

Asset cost 120,000

Useful Life 5 years

Salvage value 15,000

Units it can produce in 5 years 210,000

Formula to Find Straight-Line depreciation

Annual Deprecation = (AssetCost-Estimated Residual Value) / Estimated Year sof Usefullife

1st year Depreciation =(120,000-15000)/5 = 21000

For straight line method it would be 21000 for each year

Formula to Find units of production depreciation

Depreciation perunit = (Cost-SalvageValue) / Expectedunitsoverlifetime

=(120000-15000)/210,000
=0.5per unit

For the first Year

80000* .50 =40000

For second year

50,000*.50 =25,000

For third year

30,000*.5 =15,000

Since it will be sold by the end of third year there is not data of production for last 2 years

Double -Declining balance

S/L rate = 1 / useful life in years

=1/5

DD rate = 2 x S/L rate calculated

=2*1/5=0.4

For the first year

=Book value *DD rate

=120,000*0.4

=48,000 Depreciation and Book Value at the end of 1st year is 120,000-48000 =72,000

For the second year

=Book value *DD rate

=72,000*0.4

=28,800 Depreciation and Book Value at the end of 1st year is 72,000-28800 =43200

For the third year

=Book value *DD rate

=43,200*0.4

= 17,280 Depreciation and Book Value at the end of 1st year is 43200-17280=25,920

For the fourth year

=Book value *DD rate

=25,920*0.4

=10,368 Depreciation and Book Value at the end of 1st year is 25,920-10,368 =15,552

For the fifth year

=Book value *DD rate

=15,552*0.4

= 6220.8 Depreciation and Book Value at the end of 1st year is 15,552-6220.8 =9331.2

Note For double decline there is no need to know the salvage value

Add a comment

Answer 2

Similar Homework Help Questions

A new machine costs $120,000, has an estimated useful life of five years and an estimated...

A new machine costs $120,000, has an estimated useful life of five years and an estimated salvage value of $15,000 at the end of that time. It is expected that the machine can produce 210,000 widgets during its useful life. The New Times Company purchases this machine on January 1, 2019, and uses it for exactly three years. During these years the annual production of widgets has been 80,000, 50,000 and 30,000 units, respectively. On January 1 2022, the machine...
On January 1, 2014, a machine was purchased for $120,000. The machine has an estimated salvage...

On January 1, 2014, a machine was purchased for $120,000. The machine has an estimated salvage value of $6,000 and an estimated useful life of 6 years. The machine can operate for 200,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2014, 35,000 hrs; 2015, 45,000 hrs; 2016, 55,000 hrs; 2017, 30,000 hrs; 2018, 20,000 hrs; 2019, 15,000 hrs. (a) Compute the annual depreciation charges over the...
1) A new machine costs $35,000, and has a useful life of 10 years. Its estimated...

1) A new machine costs $35,000, and has a useful life of 10 years. Its estimated salvage value at the end of year 10 is $15,000. (a) Determine the depreciation for years 1-10. You should do this in two ways: first using straight-line depreciation (with the salvage value of $15,000), and then using double-declining balance depreciation (b) Compute present worth of the two sequences of depreciation amounts. You can use a discount rate (minimum acceptable rate of return) of 10%...

On January 1, 2018, a machine was purchased for $120,000. The machine has an estimated salvage...

On January 1, 2018, a machine was purchased for $120,000. The machine has an estimated salvage value of $9,600 and an estimated useful life of 5 years. The machine can operate for 120,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2018, 24,000 hrs; 2019, 30,000 hrs; 2020, 18,000 hrs; 2021, 36,000 hrs; and 2022, 12,000 hrs. Compute the annual depreciation charges over the machine’s life assuming...
Torge Company bought a machine for $99,000 cash. The estimated useful life was five years and...

Torge Company bought a machine for $99,000 cash. The estimated useful life was five years and the estimated residual value was $6,000. Assume that the estimated useful life in productive units is 201,000. Units actually produced were 53,600 in year 1 and 60,300 in year 2 Required: 1. Determine the appropriate amounts to complete the following schedule. (Do not round intermediate calculations.) Depreciation Expense for Book Value at the End of Method of Depreciation Year 2 Year 2 Year 1...
Fill in the blanks. $ Inputs: Machine Cost Estimated Salvage Value Estimated Useful Life in Years...

Fill in the blanks. $ Inputs: Machine Cost Estimated Salvage Value Estimated Useful Life in Years 50,000 5,000 $ Depreciation Rate Annual Depreciation Expense Accumulated Depreciation Year Carrying Value 50,000 30,000 18,000 10,800 40% 40% 40% 40% 40% $20,000 $12,000 $7,200 $20,000 32,000 39,200 b) Prepare a depreciation schedule for the following scenario if the company uses the 150% declin linnut b) Prepare a depreciation schedule for the following scenario if the company uses the 150% declining balance method. Inputs:...

0.). Howard Inc. acquired a new machine on January 1 at a cost of $80,000. It was estimated to have a useful life of 10...

0.). Howard Inc. acquired a new machine on January 1 at a cost of $80,000. It was estimated to have a useful life of 10 years and a residual salvage value of $20,000. Straight-line depreciation was used. On January 1, following six full years of use of the machinery, management decided that the estimate of useful life had been too long and that the machinery would have to be retired after three years, that is, at the end of the...
2. O n May 1, 20x1, your a machine with a useful life of 2,520,000 units...

2. O n May 1, 20x1, your a machine with a useful life of 2,520,000 units and a residual value of $10.000. In 20x1. the machine produces 100,000 units; in 20X2, 120,000 units. What is the balance in company, which uses UOP depreciation, purchases for $260,000 Accumulated Depreciation at the end of 20X27 a. $10,912 b. $11,904 c. $21,824 d. $9,920 u get a memo stating your firm uses the following formula to compute epreciation, what depreciation method will you...
machine 1: cost 76,000 salvage value 6,000 useful life 10 years purchased 7/1/16 machine 2: cost...

machine 1: cost 76,000 salvage value 6,000 useful life 10 years purchased 7/1/16 machine 2: cost 80,000 salvage value 10,000 useful life 8 years purchased 1/1/13 machine 3: cost 78,000 salvage value 6,000 useful life 6 years = 24,000 hours purchased 1/1/18 Problem: In recent years, Hrubeck Company purchased three machines. Because of heavy turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods were selected. Information concerning...

On January 1, a machine with a useful life of five years and a residual value...

On January 1, a machine with a useful life of five years and a residual value of $30,000 was purchased for $90,000. What is the depreciation expense for year 1 under the double-declining-balance method of depreciation?

A new machine costs $120,000, has an estimated useful life of five years and an estimated...

Homework Answers

Add Answer to:
A new machine costs $120,000, has an estimated useful life of five years and an estimated...

Post as a guest

Earn Coins