A piece of manufacturing equipment was purchased at the beginning of 2021 for an original cost of S50,000. Over it's useful life, the equipment is expected to produce 40,000 widgets as follows: 2021: 4,000 units 2022: 10,000 units 2023: 12,000 units 2024: 8,000 units 2025: 6,000 units The asset can be salvaged for 10% of its original cost at the end of 2025. The usage of the asset varies over tíme and is dependent on the output. What is depreciation expense for 2025?

A piece of manufacturing equipment was purchased at the beginning of 2021 for an original cost of S50,000. Over it's useful life, the equipment is expected to produce 40,000 widgets as follows: 2021: 4,000 units 2022: 10,000 units 2023: 12,000 units 2024: 8,000 units 2025: 6,000 units The asset can be salvaged for 10% of its original cost at the end of 2025. The usage of the asset varies over tíme and is dependent on the output. What is depreciation expense for 2025?

Name: A piece of manufacturing equipment was purchased at the beginning of
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: A piece of manufacturing equipment was purchased at the beginning of 2021 for an original cost of$50,000. Over it's useful life, the equipment is expected to produce 40,000 widgets as follows:2021: 4,000 units2022: 10,000 units2023: 12,000 units2024

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Prepare the journal entry to record the acquisition of the equipment.

A: The record of day-to-day transactions in the books of accounts is called journal entries. In a…

Q: Gateway Inc. bought a machine on January 1, 2021 for $50,000. Gateway plans to keep the machine for…

A: Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life…

Q: A certain machine was bought for $225,000. Delivery and installation costs are $15,000 and #6, 500,…

A: Approach to solving the question:Please see attached photos for detailed solutions. Thank…

Q: Wildhorse Manufacturing purchases equipment with an expected life of 10 years for $49500. The…

A: The payback period is the time to recover the cost of investment.

Q: 2) The initial cost of a new m/c is $10,0000. The annual maintenance cost is $3,000 for first 2…

A: The question is based on the calculation of EUAC ( equivalent Uniform Annual cost) . EUAC is a…

Q: A company is considering three pieces of equipment. Equipment A has a first cost of $80,000, AOC of…

A: NPV represents the amount of profitability generated by an investment and is expressed in absolute…

Q: On January 1, 2024, Grinch Inc. began construction of an automated cattle feeder system. The system…

A: The interest expense reported in an income statement represents the cost of borrowing for a company.…

Q: On September 30, 2020, Zee Company purchased an equipment for P240,000 to be used for the next 4…

A: Depreciation Expense are not deducted from Cost of the Asset instead they are held in the…

Q: On January 1, 2021, Kendall Inc. began construction of an automated cattle feeder system. The system…

A: The question is related to Borrowing Cost. Weighted Average Accumulated expenditure is the product…

Q: On July 1, 2020, Ivanhoe Company acquired a new machine for $172,000 and estimated it would have a…

A: Year 2020 (Acquisition):DateAccount Titles and ExplanationDebitCreditJuly 2020Machinery…

Q: Sunland Company bought a machine on January 1, 2022. The machine cost $168000 and had an expected…

A: Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life…

Q: ast Delivery expects the plane to remain useful for five years (6, 4,300,000. Fast Delivery expects…

A: a) Straight line depreciation= (Cost - Salvage value)/Useful life= (54,300,000 - 4,300,000)/5 =…

Q: On January 1, 2019, Williams Company purchased a copy machine. The machine costs $160,000, its…

A: Depreciation Expenses - Depreciation Expenses are the expense incurred on the wear and tear of the…

Q: In late September 2020, $ 150,000 fair value building is estimated to have a useful life of 20 years…

Q: Q Iron Chemicals acquires a machine that should go through a major overhaul every three years. The…

A: Apart from normal repair and maintenance, any expenditure that improves or enhances the capacity of…

Q: Ford for the company president on June 1, 2020 for $75,000. The automobile is expected to have a…

A: The depreciation expense is charged on fixed assets as reduced value of the fixed asset with usage…

Q: On July 1, 2019, Crane Company purchased new equipment for $80,000. Its estimated useful life was 5…

A: Depreciation is charged against the value of fixed assets. It can be calculated by using the…

Q: ! Required information [The following information applies to the questions displayed below.] On…

A: The depreciation expense under the sum-of-the-years' digits method is computed by multiplying the…

Q: A construction company is evaluating two options for an elevator, each of which has a useful life in…

A: Here,Life of both Option is 10 yearsCost of Option-1 is $45,000Cost of Option-2 is $54,000Annual…

Q: On January 1, 2020, QuickAir Transportation Company purchased a used aircraft at a cost o…

A: The depreciation expense is charged on the fixed assets as a reduction in the value of the fixed…

Q: Beck Construction Company began work on a new building project on January 1, 2023. The project is to…

A: Since revenue is recognized on completion of contract, any anticipated gain should not be recognized…

Q: The table given below lists the relevant cost items for a specific system purchase. The operating…

A: Answer a) Basic cost =$160000+$15000+$15000=$190000Salvage value =$160000 x 25%=$40000Depreciation…

Q: Multiple Choice $41766 $35,369 $44.798 $39,309

A: Accretion expense is generally recognized with respect to asset retirement obligations (AROs). An…

Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

Topic Video

Question

A piece of manufacturing equipment was purchased at the beginning of 2021 for an original cost of
$50,000. Over it's useful life, the equipment is expected to produce 40,000 widgets as follows:
2021: 4,000 units
2022: 10,000 units
2023: 12,000 units
2024: 8,000 units
2025: 6,000 units
The asset can be salvaged for 10% of its original cost at the end of 2025. The usage of the asset varies over
time and is dependent on the output. What is depreciation expense for 2025?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

A newly constructed water treatment facility costs $2 million. It is estimated that the facility will need revamping to maintain the original design specification every 30 years at a cost of $1 million. Annual repairs and maintenance costs are estimated to be $100,000. At an interest rate of 8%, determine the capitalized cost of the facility, assuming that it will be used for an indefinite period.
In August 2024, Carla Vista Helicopters Ltd. purchased a new helicopter for its logging and heavy lift operations at a cost of $1.05 million. Based on past experience, management has determined that the helicopter will have a useful life of 18,000 flying hours, at which time it will have an estimated residual value of $150,000. During 2024, the helicopter was used for 1,800 flying hours, and in 2025 it was used for 2,000 flying hours. Carla Vista Helicopters has a December 31 year end and uses the units-of-production method of depreciation for its helicopters. Determine the depreciation expense on this helicopter for 2025 and its carrying amount at December 31, 2025. Depreciation expense $ Carrying amount $ 2025
On January 1, 2021, we purchased equipment for $24,000 and paid $800 to have the equipment installed in your store. The equipment had an estimated salvage value of $2,000 and an estimated life of 10 years. The equipment was estimated to be able to operate 30,000 hours during its ten-year life. Actual hours of operation in the first three years were: 2021 2,800 Hours 3,200 Hours 3,100 Hours 2022 2023 How much total depreciation should be recorded over the entire ten-year life of the equipment? а. b. Calculate the depreciation expense (rounded to the nearest DOLLAR) for each of the first three years (2021, 2022, and 2023) assuming: (Please show your calculations) 1. Sum of the years' digits method of depreciation Straight line method of depreciation Service hours method of depreciation 175% declining balance method of depreciation 2. 3. 4. If this equipment had been purchased on April 1, 2021 instead of January 1, calculate the depreciation expense for 2021, 2022, and for 2023 (rounded…
2) The initial cost of a new m/c is $10,000. The annual operating cost is $1,000/yr for first 3 years, and then becomes $3,000/yr after that. The m/c needs a major repair at the end of 5th year, which costs $5,000. The m/c has 10 years useful life with salvage value of $4,000. Calculate EUAC for keeping the m/c for 10 years. (i=10%/yr)
Sum-of-the-year's-digits. Jon Seceda Furnace Corp. purchased machinery for $315,000 on May 1, 2020. It is estimated that it will have a useful life of 10 years, salvage value of $15,000, production of 240,000 units, and working hours of 25,000. During 2021, Seceda Corp. uses the machinery for 2,650 hours, and the machinery produces 25,500 units My understanding of the equation is (Cost-Salvage Value) x Depreciation Fraction = Depreciation Charge. My calculation: ($315,000-$15,000) x 10/55 = 54,545.45 Bartely's answer (which is correct): ($315,000-$15,000) x 10/55 x 4/12 = 18,181.81 ($315,000-$15,000) x 9/55 x 8/12 = 32,727.27 Sum-of-the-Years'-digits = 50,909.08 (add 18,181.81 and 32,727.27) My question is where does the fractions (4/12 and 8/12) come from?
Getaway Inc. bought a machine on January 1, 2021 for $50,000. Getaway plans to keep the machine for 10 years. What is the machine's carrying value on June 30, 2023 assuming Gateway uses straight-line depreciation?
8. On January 1, 2019, Sapphire Manufacturing Company purchased a machine for $40,000,000. The company expects to use the machine for 24,000 hours over the next six years. The estimated residual value of the machine at the end of the sixth year is $40,000. The schedule of usage of the machine is below. Year Usage 1 4,500 2 6,000 3 5,200 4 4,300 5 2,000 6 2,000 Prepare the depreciation schedule using the units-of-production method of depreciation.
A machine that produces cellphone components is purchased on January 1, 2024, for $171,000. It is expected to have a useful life of four years and a residual value of $12,000. The machine is expected to produce a total of 200,000 components during its life, distributed as follows: 40,000 in 2024, 50,000 in 2025, 60,000 in 2026, and 50,000 in 2027. The company has a December 31 year end. (a) Calculate the amount of depreciation to be charged each year, using each of the following methods: i. Straight-line method Straight-line method depreciation Senter a dollar amount per year per year ii. Units-of-production method (Round depreciation per unit to 3 decimal places, e.g. 15.257 and depreciation expense to 0 decimal places, e.g. 125.) Units-of-production method depreciation Senter a dollar amount per unit rounded to 3 decimal places per unit Year Depreciation Expense 2024 Senter a dollar amount 2025 Senter a dollar amount 2026 Senter a dollar amount 2027 Senter a dollar amount iii.…
A machine costs $210,000, has a $14,000 salvage value, is expected to last ten years, and will generate an after-tax income of $43,000 per year after straight-line depreciation. Compute the payback period.
a. A new operating system for an existing machine is expected to cost $630,000 and have a useful life of six years. The system yields an incremental after-tax income of $195,000 each year after deducting its straight line depreciation. The predicted salvage value of the system is $26,200 b. A machine costs $540,000, has a $35,000 salvage value, is expected to last eight years, and will generate an after tax income of $82,000 per year after streight-line depreciation Assume the company requires a 12% rate of return on its investments. Compute the net present value of each potential investment (PV of 5), EV of S1, PVA of 31 and EVA of 50 (Use appropriate factor(s) from the tables provided) Complete this question by entering your answers in the tabs below. Required A Required A new operating system for an existing machine is expected to cost $630,000 and have a useful life of six years. The system vieles an incremental after-tax income of $195,000 each year after deducting its…