Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter10: Long-lived Tangible And Intangible Assets
Section: Chapter Questions
Problem 29P
Related questions
Question
A4
![Case 7-1: Use the information below to answer Questions 1-4.
A business purchased a machine that had a total cost of $550,000 and a residual value of
$35,000. The asset is expected to service the business for a period of 10 years or produce a total
of 1,980,000 units. The machine was purchased January 1st of the current year and has been in
service one complete year.
1.
2.
3.
4.
Refer to Case 7-1. What is the depreciable cost of the asset?
A. $ 35,000
B. $550,000
C. $515,000
D. $ 55,000
Refer to Case 7-1. Using the straight-line method, what is the amount of depreciation
expense in year two of the asset's life?
A. $ 51,500
B. $103,000
C. $ 55,000
D. $110,000
Refer to Case 7-1. Now assume the business uses the units-of-production method. If the
asset produces 500,000 units in year one and 400,000 units in year two, what is book
value at the end of year two? (Round your calculation of depreciation per unit to the
closest cent.)
A. $234,000
B. $316,000
C. $298,000
D. $252,000
Refer to Case 7-1. What is the depreciation expense in year one, if the double-declining-
balance method is used?
A. $ 55,000
B. $110,000
C. $103,000
D. $ 51,500
7-1](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F603cba53-c62d-4eab-9eb1-bca52611cd12%2F4d2e6c0d-3816-4445-b811-d2b5ec2b1b93%2F55fajul_processed.png&w=3840&q=75)
Transcribed Image Text:Case 7-1: Use the information below to answer Questions 1-4.
A business purchased a machine that had a total cost of $550,000 and a residual value of
$35,000. The asset is expected to service the business for a period of 10 years or produce a total
of 1,980,000 units. The machine was purchased January 1st of the current year and has been in
service one complete year.
1.
2.
3.
4.
Refer to Case 7-1. What is the depreciable cost of the asset?
A. $ 35,000
B. $550,000
C. $515,000
D. $ 55,000
Refer to Case 7-1. Using the straight-line method, what is the amount of depreciation
expense in year two of the asset's life?
A. $ 51,500
B. $103,000
C. $ 55,000
D. $110,000
Refer to Case 7-1. Now assume the business uses the units-of-production method. If the
asset produces 500,000 units in year one and 400,000 units in year two, what is book
value at the end of year two? (Round your calculation of depreciation per unit to the
closest cent.)
A. $234,000
B. $316,000
C. $298,000
D. $252,000
Refer to Case 7-1. What is the depreciation expense in year one, if the double-declining-
balance method is used?
A. $ 55,000
B. $110,000
C. $103,000
D. $ 51,500
7-1
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