On 1/1/2011, ABC Company purchased a piece of equipment costing $65,000. The equipment is expected to...
On 1/1/2011, ABC Company purchased a piece of equipment costing
$65,000. The equipment is expected to have a useful life equal to 5
years and a salvage value equal to $5,000.
Calculate the first two years’ depreciation
expense using the following methods respectively.
1) the straight-line method
2011:
2012:
2) the double-declining method and
2011:
2012:
3) the sum-of-years’-digits’ method.
2011:
2012:
Homework Answers
Correct Answer:
Requirement 1:
|
Year |
Depreciation expense |
|
2011 |
$12,000.00 |
|
2012 |
$12,000.00 |
Working:
|
Straight Line Depreciation |
||
|
A |
Cost |
$ 65,000.00 |
|
B |
Residual Value |
$ 5,000.00 |
|
C=A - B |
Depreciable base |
$ 60,000.00 |
|
D |
Life [in years] |
5 |
|
E=C/D |
Annual SLM depreciation |
$ 12,000.00 |
Requirement 2:
|
Year |
Depreciation expense |
|
2011 |
$ 26,000.00 |
|
2012 |
$ 15,600.00 |
Working:
|
Double Declining Method |
||
|
A |
Cost |
$ 65,000.00 |
|
B |
Residual Value |
$ 5,000.00 |
|
C=A - B |
Depreciable base |
$ 60,000.00 |
|
D |
Life [in years] |
5 |
|
E=C/D |
Annual SLM depreciation |
$ 12,000.00 |
|
F=E/C |
SLM Rate |
20.00% |
|
G=F x 2 |
DDB Rate |
40.00% |
|
Year |
Beginning Book Value |
Depreciation rate |
Depreciation expense |
Ending Book Value |
|
1 |
$ 65,000.00 |
40.00% |
$ 26,000.00 |
$ 39,000.00 |
|
2 |
$ 39,000.00 |
40.00% |
$ 15,600.00 |
$ 23,400.00 |
Requirement 3:
|
Year Depreciation expense |
|
|
2011 |
$ 20,000 |
|
2012 |
$ 16,000 |
Working:
|
Sum of year's digit |
||
|
Cost |
$ 65,000.00 |
|
|
Residual Value |
$ 5,000.00 |
|
|
Depreciable base |
$ 86,520.00 |
|
|
sum of years (1+2+3+4+5) = 15 |
15 |
|
|
2011 |
$ 20,000 |
Depreciable base * ( 5/15) |
|
2,012 |
$16,000 |
Depreciable base * (4/15) |
End of answer.
Please give a thumbs-up, it will be highly appreciated.
Thanks.
Add Answer to:
On 1/1/2011, ABC Company purchased a piece of equipment costing
$65,000. The equipment is expected to...
•On Jan 1, ABC Co. purchased a piece of equipment for $280,000, $30,000 salvage value, 4...
•On Jan 1, ABC Co. purchased a piece of equipment for $280,000, $30,000 salvage value, 4 year useful life. The equipment is estimated to produce 500,000 units over its life. Actual units produced were 125,000; 100,000; 175,000; 100,000 for years 1-4, respectively. Determine depreciation for each year under straight line, units of production, and double declining balance. • •Part B. At the end of year 3 (prior to recording depreciation expense for that year) ABC Co changed the estimated useful...
On January 1, Year 1, Fukisan purchased a new piece of equipment for specialized-furniture manufacturing at...
On January 1, Year 1, Fukisan purchased a new piece of
equipment for specialized-furniture manufacturing at a cost of
$300,000, inclusive of shipping and installation. At the time of
purchase, the equipment had an estimated useful life of 15 years
and an expected salvage value of $10,000 at the end of the 15
years.
For future budgeting purposes, Eric Anderson, CFO of Fukisan
Inc. has asked you to perform the depreciation expense calculations
for Year 2, Year 3, and Year...
ABC Company purchased Equipment on January 1, 2010 at a cost of $ 65,000. It has...
ABC Company purchased Equipment on January 1, 2010 at a cost of $ 65,000. It has a salvage value of $ 5,000 and a useful life of 10 years. It is estimated that the machinery will produce 100,000 units during its life. The company uses the units of production method. The units produced during the first two years are as follows: 2010 25,000 units 2011 20,000 units a- Calculate the depreciable cost b- Calculate the depreciable cost per unit C-...
A piece of equipment is purchased on 1/1/2009 and booked for $8,000 with a salvage value...
A piece of equipment is purchased on 1/1/2009 and booked for $8,000 with a salvage value of $500 and a useful life of 7 years. For the first 2 years double declining balance was used. Starting in year 3, the method was switched to the straight-line method with the useful life extended to 9 years. What will be the amount of depreciation recorded in 2011?
ABC Company purchased equipment on January 1, 2009 for $72,000. It was estimated that the equipment...
ABC Company purchased equipment on January 1, 2009 for $72,000. It was estimated that the equipment would have a $5,000 salvage value at the end of its 5-year useful life. It was also estimated that the equipment would produce 100,000 units over its 5-year life. If the company used the double- declining balance method of depreciation, what was the balance of the Accumulated Depreciation of the equipment at December 31, 2011?
Novak Company purchased equipment for $230,000 on October 1, 2020. It is estimated that the equipment...
Novak Company purchased equipment for $230,000 on October 1, 2020. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $14,000. Estimated production is 36,000 units and estimated working hours are 20,000. During 2020, Novak uses the equipment for 520 hours and the equipment produces 1,000 units. Compute depreciation expense under each of the following methods. (Novak is on a calendar-year basis ending December 31.) a. Straight line method for 2020...
33. ABC Company purchased equipment on January 1, 2009 for $72,000. It was estimated that the...
33. ABC Company purchased equipment on January 1, 2009 for $72,000. It was estimated that the equipment would have a $5,000 salvage value at the end of its 5-year useful life. It was also estimated that the equipment would produce 100,000 units over its 5-year life. If the company used the double-declining balance method of depreciation, what was the balance of the Accumulated Depreciation of the equipment at December 31, 2011?* (3 Points) some other amount $44,800 $54,880 $56,480
On January 4, 2019, Columbus Company purchased new equipment for $693,000 that had a useful life...
On January 4, 2019, Columbus Company purchased new equipment for
$693,000 that had a useful life of four years and a salvage value
of $53,000.
Required:
Prepare a schedule showing the annual depreciation and end-of-year
accumulated depreciation for the first three years of the asset’s
life under the straight-line method, the sum-of-the-years’-digits
method, and the double-declining-balance method.
Analyze:
If the double-declining balance method is used to compute
depreciation, what would be the book value of the asset at the end...
Coronado Company purchased equipment for $216,240 on October 1, 2017. It is estimated that the equipment...
Coronado Company purchased equipment for $216,240 on October 1, 2017. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $12,240. Estimated production is 40,000 units and estimated working hours are 20,300. During 2017, Coronado uses the equipment for 530 hours and the equipment produces 1,100 units. Compute depreciation expense under the following methods. Coronado is on a calendar-year basis ending December 31. (Round rate per hour and rate per unit...
On July 1, 2020, Swifty Company purchased for $6,120,000 snow-making equipment having an estimated useful life...
On July 1, 2020, Swifty Company purchased for $6,120,000 snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of $255,000. Depreciation is taken for the portion of the year the asset is used. Complete the form below by determining the depreciation expense and year-end book values for 2020 and 2021 using the 1. sum-of-the-years'-digits method. 2. double-declining balance method. 2020 2021 Sum-of-the-Years'-Digits Method Equipment Less: Accumulated Depreciation $6,120,000 $6,120,000 Year-End Book Value $6,120,000 $6,120,000...
On January 1, Year 1, Fukisan purchased a new piece of
equipment for specialized-furniture manufacturing at a cost of
$300,000, inclusive of shipping and installation. At the time of
purchase, the equipment had an estimated useful life of 15 years
and an expected salvage value of $10,000 at the end of the 15
years.
For future budgeting purposes, Eric Anderson, CFO of Fukisan
Inc. has asked you to perform the depreciation expense calculations
for Year 2, Year 3, and Year...
ABC Company purchased Equipment on January 1, 2010 at a cost of $ 65,000. It has a salvage value of $ 5,000 and a useful life of 10 years. It is estimated that the machinery will produce 100,000 units during its life. The company uses the units of production method. The units produced during the first two years are as follows: 2010 25,000 units 2011 20,000 units a- Calculate the depreciable cost b- Calculate the depreciable cost per unit C-...
33. ABC Company purchased equipment on January 1, 2009 for $72,000. It was estimated that the equipment would have a $5,000 salvage value at the end of its 5-year useful life. It was also estimated that the equipment would produce 100,000 units over its 5-year life. If the company used the double-declining balance method of depreciation, what was the balance of the Accumulated Depreciation of the equipment at December 31, 2011?* (3 Points) some other amount $44,800 $54,880 $56,480
On January 4, 2019, Columbus Company purchased new equipment for
$693,000 that had a useful life of four years and a salvage value
of $53,000.
Required:
Prepare a schedule showing the annual depreciation and end-of-year
accumulated depreciation for the first three years of the asset’s
life under the straight-line method, the sum-of-the-years’-digits
method, and the double-declining-balance method.
Analyze:
If the double-declining balance method is used to compute
depreciation, what would be the book value of the asset at the end...
On July 1, 2020, Swifty Company purchased for $6,120,000 snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of $255,000. Depreciation is taken for the portion of the year the asset is used. Complete the form below by determining the depreciation expense and year-end book values for 2020 and 2021 using the 1. sum-of-the-years'-digits method. 2. double-declining balance method. 2020 2021 Sum-of-the-Years'-Digits Method Equipment Less: Accumulated Depreciation $6,120,000 $6,120,000 Year-End Book Value $6,120,000 $6,120,000...
Most questions answered within 3 hours.
-
Using the 12th edition of Language Awareness,
complete the following assignment:
After reading Akiba Solomon's "Thugs....
asked 6 minutes ago -
For all problems assume an effective monthly interest rate of 1%
unless otherwise indicated in the...
asked 17 minutes ago -
Fix all syntax and logical errors for the following program.
Please generate the correct output. //...
asked 25 minutes ago -
The USPS sells money orders identified by an 11 –digit number
x1, x2, …, x11. The...
asked 29 minutes ago -
Provide an example of equilibrium in relation to
Newton’s First and Second Laws. Explain your answer....
asked 30 minutes ago -
You are __________ to commit a Type I error using the 0.05 level
of significance than...
asked 49 minutes ago -
1. the following results are obtained:
200
kiwi
575 wild-type
What can we conclude about the...
asked 53 minutes ago -
Explain how you might use E. coli bacteria to produce human
growth hormone using the following:...
asked 54 minutes ago -
WHAT IS THE EFFEKT OF ADD K2CO3 TO ( METHANOL OG WATER)?
asked 1 hour ago -
Calculate the cell potential, the equilibrium constant, and the
free-energy change for: Ca(s)+Mn2+(aq)(1M)⇌Ca2+(aq)(1M)+Mn(s) given
the following...
asked 1 hour ago -
Determine the pH at the equivalence (stoichiometric) point in
the titration of 48 mL of 0.28...
asked 1 hour ago -
11. In CPM/PERT, an activity that is on the critical path
A. has equal values for...
asked 1 hour ago