Exercise 11-2 (Part Level Submission)
Buffalo Company acquired a plant asset at the beginning of Year
1. The asset has an estimated service life of 5 years. An employee
has prepared depreciation schedules for this asset using three
different methods to compare the results of using one method with
the results of using other methods. You are to assume that the
following schedules have been correctly prepared for this asset
using (1) the straight-line method, (2) the
sum-of-the-years'-digits method, and (3) the
double-declining-balance method.
Year |
Straight-Line |
Sum-of-the- |
Double-Declining- |
|||||||||
1 | $13,500 | $22,500 | $30,000 | |||||||||
2 | 13,500 | 18,000 | 18,000 | |||||||||
3 | 13,500 | 13,500 | 10,800 | |||||||||
4 | 13,500 | 9,000 | 6,480 | |||||||||
5 | 13,500 | 4,500 | 2,220 | |||||||||
Total | $67,500 | $67,500 | $67,500 |
(a) What is the cost of the asset being depreciated?
$
(b) What amount, if any, was used in the depreciation calculations
for the salvage value for this asset?
$
(c) Which method will produce the highest charge to income in Year
1?
Double-declining balance methodSum-of-the-years'-digits
methodStraight-line method
(d) Which method will produce the highest charge to income in Year
4?
Straight-line methodSum-of-the-years'-digits methodDouble-declining
balance method
(e) Which method will produce the highest book value for the asset
at the end of Year 3?
Sum-of-the-years'-digits methodStraight-line methodDouble-declining
balance method
(f) If the asset is sold at the end of Year 3, which method would
yield the highest gain (or lowest loss) on disposal of the
asset?
Double-declining balance methodStraight-line
methodSum-of-the-years'-digits method
)ANS-
(a) cost of depreciated assets- $67500
(b) nil
(c) double declining balance method charge highest in 1st year income its $30000/-
(d) straight line method charge highest on 4th year income $ 13500/-
(e)straight line method produce highest book value in the end of the year 3 .
(f) if assets sold in end of the year 3 than highest income will come with straight line method.
Exercise 11-2 (Part Level Submission) Buffalo Company acquired a plant asset at the beginning of Year...
Sheffield Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. An employee has prepared depreciation schedules for this asset using three different methods to compare the results of using one method with the results of using other methods. You are to assume that the following schedules have been correctly prepared for this asset using (1) the straight-line method, (2) the sum-of-the-years'-digits method, and (3) the double-declining-balance method. Year...
Exercise 11-02 Marigold Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. An employee has prepared depreciation schedules for this asset using three different methods to compare the results of using one method with the results of using other methods. You are to assume that the following schedules have been correctly prepared for this asset using (1) the straight-line method, (2) the sum-of-the-years'-digits method, and (3) the double-declining-balance...
Coronado Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. An employee has prepared depreciation schedules for this asset using three different methods to compare the results of using one method with the results of using other methods. You are to assume that the following schedules have been correctly prepared for this asset using (1) the straight-line method, (2) the sum-of-the-years'-digits method, and (3) the double-declining-balance method. Sum-of-the...
Monty Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. An employee has prepared depreciation schedules for this asset using three different methods to compare the results of using one method with the results of using other methods. You are to assume that the following schedules have been correctly prepared for this asset using (1) the straight-line method, (2) the sum-of-the-years'-digits method, and (3) the double-declining-balance method. Year...
Hightower Company acquired an asset on January 2, 2019, at a cost of $154,000. The asset’s useful life is four years and its salvage value is $52,000. Compute the depreciation expense for each of the first two years, using the straight-line method, the double-declining-balance method, and the sum-of-the-years’-digits method. Compute the depreciation expense for the first two years, using the straight-line method. STRAIGHT-LINE METHOD Year Acquisition Cost Salvage Value Useful Life Depreciation Accumulated Depreciation 1 years 2 years DOUBLE-DECLINING-BALANCE METHOD...
Preparing Depreciation Schedules Using Various Depreciation Methods Frito Inc. acquired equipment on January 1, 2020, at a cost of $12,000 that is estimated to have a useful life of five years and a residual value of $3,000. Required Prepare a depreciation schedule showing annual depreciation expense and year-end accumulated depreciation and book value over the life of the asset using the following methods. a. Straight-line method. b. Sum-of-the-years'-digits method. C. Double-declining-balance method. Straight-line Sum-of-the-years'-digits Double-declining balance c. Double-Declining-Balance Depreciation Method...
Preparing Depreciation Schedules Using Various Depreciation Methods Frito Inc. acquired equipment on January 1, 2020, at a cost of $12,000 that is estimated to have a useful life of five years and a residual value of $3,000 Required Prepare a depreciation schedule showing annual depreciation expense and year-end accumulated depreciation and book value over the life of the asset using the following methods. a. Straight-line method. b. Sum-of-the-years'-digits method. c. Double-declining-balance method. Straight-line Sum-of-the-years'-digits Double-declining balance b. Sum-of-the-Years'-Digits Depreciation Method...
Preparing Depreciation Schedules Using Various Depreciation Methods Frito Inc. acquired equipment on January 1, 2020, at a cost of $12,000 that is estimated to have a useful life of five years and a residual value of $3,000. Required Prepare a depreciation schedule showing annual depreciation expense and year-end accumulated depreciation and book value over the life of the asset using the following methods. a. Straight-line method. b. Sum-of-the-years'-digits method. c. Double-declining-balance method. Straight-line Sum-of-the-years'-digits Double-declining balance a. Straight-Line Depreciation Method...
Exercise 11-3 Buffalo Company purchased a new plant asset on April 1, 2017, at a cost of $867,420. It was estimated to have a service life of 20 years and a salvage value of $73,200. Buffalo's accounting period is the calendar year. x] Your answer is incorrect. Try again. Compute the depreciation for this asset for 2017 and 2018 using the sum-of-the-years'-digits method. (Round answers to 0 decimal places, e.g. 45,892.) Depreciation for 2017 ne pr . Depreciation for 2018...
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...