Homework Help is Here – Start Your Trial Now!
Business
Economics
An asset for drilling was purchased and placed in service by a petroleum production company. Its cost basis is $60,000, and it has an estimated MV of $12,000 at the end of an estimated useful life of 12 years. Compute the depreciation amount in the second year and the BV at the end of the fourth year of life by each of these methods: a. The SL method. b. The 200% DB method with switchover to SL. c. The GDS. d. The ADS. Click the icon to view the partial listing of depreciable assets used in business. Click the icon to view the GDS Recovery Rates (rk). a. Using the SL method the depreciation amount in the second year is $ 4000. (Round to the nearest dollar.) Using the SL method the BV at the end of the fourth year of life is $ 44000. (Round to the nearest dollar.) b. Using the 200% DB method the depreciation amount in the second year is $ 8,333. (Round to the nearest dollar.) Using the 200% DB method the BV at the end of the fourth year of life is $ 28935. (Round to the nearest dollar.) c. Using the GDS the depreciation amount in the second year is $ 14694. (Round to the nearest dollar.) Using the GDS the BV at the end of the fourth year of life is $ 18744. (Round to the nearest dollar.) d. Using the ADS the depreciation amount in the second year is $4000. (Round to the nearest dollar.)

An asset for drilling was purchased and placed in service by a petroleum production company. Its cost basis is $60,000, and it has an estimated MV of $12,000 at the end of an estimated useful life of 12 years. Compute the depreciation amount in the second year and the BV at the end of the fourth year of life by each of these methods: a. The SL method. b. The 200% DB method with switchover to SL. c. The GDS. d. The ADS. Click the icon to view the partial listing of depreciable assets used in business. Click the icon to view the GDS Recovery Rates (rk). a. Using the SL method the depreciation amount in the second year is $ 4000. (Round to the nearest dollar.) Using the SL method the BV at the end of the fourth year of life is $ 44000. (Round to the nearest dollar.) b. Using the 200% DB method the depreciation amount in the second year is $ 8,333. (Round to the nearest dollar.) Using the 200% DB method the BV at the end of the fourth year of life is $ 28935. (Round to the nearest dollar.) c. Using the GDS the depreciation amount in the second year is $ 14694. (Round to the nearest dollar.) Using the GDS the BV at the end of the fourth year of life is $ 18744. (Round to the nearest dollar.) d. Using the ADS the depreciation amount in the second year is $4000. (Round to the nearest dollar.)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 2E
See similar textbooks
icon
Related questions
Question
An asset for drilling was purchased and placed in service by a petroleum production company. Its cost basis is $60,000, and it has an estimated MV of $12,000 at the end of an estimated useful life of 12 years. Compute the depreciation amount in the second year and the BV at the end of the fourth year of life by each of these methods: a. The SL method. b. The 200% DB method with switchover to SL. c. The GDS. d. The ADS. Click the icon to view the partial listing of depreciable assets used in business. Click the icon to view the GDS Recovery Rates (rk). a. Using the SL method the depreciation amount in the second year is $ 4000. (Round to the nearest dollar.) Using the SL method the BV at the end of the fourth year of life is $ 44000. (Round to the nearest dollar.) b. Using the 200% DB method the depreciation amount in the second year is $ 8,333. (Round to the nearest dollar.) Using the 200% DB method the BV at the end of the fourth year of life is $ 28935. (Round to the nearest dollar.) c. Using the GDS the depreciation amount in the second year is $ 14694. (Round to the nearest dollar.) Using the GDS the BV at the end of the fourth year of life is $ 18744. (Round to the nearest dollar.) d. Using the ADS the depreciation amount in the second year is $4000. (Round to the nearest dollar.)
Transcribed Image Text:An asset for drilling was purchased and placed in service by a petroleum production company. Its cost basis is $60,000, and it has an estimated MV of $12,000 at the end of an estimated useful life of 12 years. Compute the depreciation amount in the second year and the BV at the end of the fourth year of life by each of these methods: a. The SL method. b. The 200% DB method with switchover to SL. c. The GDS. d. The ADS. Click the icon to view the partial listing of depreciable assets used in business. Click the icon to view the GDS Recovery Rates (rk). a. Using the SL method the depreciation amount in the second year is $ 4000. (Round to the nearest dollar.) Using the SL method the BV at the end of the fourth year of life is $ 44000. (Round to the nearest dollar.) b. Using the 200% DB method the depreciation amount in the second year is $ 8,333. (Round to the nearest dollar.) Using the 200% DB method the BV at the end of the fourth year of life is $ 28935. (Round to the nearest dollar.) c. Using the GDS the depreciation amount in the second year is $ 14694. (Round to the nearest dollar.) Using the GDS the BV at the end of the fourth year of life is $ 18744. (Round to the nearest dollar.) d. Using the ADS the depreciation amount in the second year is $4000. (Round to the nearest dollar.)
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS