applies to the questions displayed below.]Nicole's Getaway Spa (NGS) purchased a hydrotherapy tub system to add to the wellness programs at NGS. The machinewas purchased at the beginning of the year at a cost of $15,500. The estimated useful life was five years and the residualvalue was $1,500. Assume that the estimated productive life of the machine is 10,000 hours. Expected annual productionwas year 1, 2,350 hours; year 2, 2,500 hours; year 3, 2,050 hours; year 4, 2,100 hours; and year 5, 1,000 hours.3. Assume NGS sold the hydrotherapy tub system for $4,650 at the end of year 3. The following amounts were forecast for year 3:Sales Revenues $52,000; Cost of Goods Sold $41,000; Other Operating Expenses $4,500; and Interest Expense $700. Create anincome statement for year 3 for each of the different depreciation methods, ending at Income before Income Tax Expense. (Don'tforget to include a loss or gain on disposal for each method.). (Do not round intermediate calculations. Round your answers to thenearest dollar amount.)Operating Expenses:NICOLE'S GETAWAY SPA(Forecasted) Income StatementFor the Year Ended Year 3Straight-Line+Units-of-ProductionDouble-DecliningBalance000

Niole's Getaway SpaINCOME STATEMENT FOR YEAR 3 Straight-Line Depreciation(Units-of-Production…

Answered: applies to the questions displayed…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company owner has asked his accountant to research the photocopier equipment available from vendors, and to recommend the two best equipment alternatives. The company owner will decide on one piece of equipment to purchase. The fee charged for the accountant’s research was $500. The accountant’s report produced the following information: Photocopier (A) Photocopier (B) Initial cost, including installation $6,500 $ 6,000 Economic life 5 years 5 years Scrap value at end of economic life -0- -0- Initial training cost $ 500 $ 700 Annual maintenance $ 400 $ 300 Annual wage cost $12,500 $12,500 REQUIRED Which photocopier should the company owner choose? Why? The company owner requested your help in preparing the coming year company budget. Please, guide him to the best method and appropriate type from your perspective. Evaluation and Grading: Your answers would be evaluated and graded based on: Coverage…
Required information [The following information applies to the questions displayed below.) Nicole's Getaway Spa (NGS) purchased a hydrotherapy tub system to add to the wellness programs at NGS. The machine was purchased at the beginning of the year at a cost of $8.500. The estimated useful life was five years and the residual value was $500. Assume that the estimated productive life of the machine is 10,000 hours. Expected annual production was year 1, 2,250 hours; year 2, 2,350 hours; year 3, 2,300 hours, year 4, 2,100 hours; and year 5, 1,000 hours. 3. Assume NGS sold the hydrotherapy tub system for $2.550 at the end of year 3. The following amounts were forecast for year 3: Sales Revenues $44,000; Cost of Goods Sold $34,000; Other Operating Expenses $4,400, and Interest Expense $900. Create an income statement for year 3 for each of the different depreciation methods, ending at Income before Income Tax Expense. (Don't forget to include a loss or gain on disposal for each method.).…
A paper company paid $4,00,000 at the start of a project to clear an area of land and plant some young pine trees. The trees will mature in 10 years, at that time what will be the value of forest? If these costs will be incurred for plantation and clear the land: i) ii) They required $20,000 at the start of every year for medicine and spray for the land Salaries of the gardeners’ $10,000 paid at the end of each year Required: What should be the value of the forest if interest rate is 15%?
A water pump to be used by the city’s maintenance department costs $10 000 new. A running-in period, costing $1000 immediately, is required for a new pump. Operating and maintenance costs average $500 the first year, increasing by $300 per year thereafter. The salvage value of the pump at any time can be estimated by the declining balance rate of 20 percent. Interest is at 10 percent. Using a spreadsheet, calculate the EAC for replacing the pump after one year, two years, etc. How often should the pump be replaced?
Required information. [The following information applies to the questions displayed below] University Car Wash purchased new soap dispensing equipment that cost $231,000 including installation. The company estimates that the equipment will have a residual value of $25,500. University Car Wash also estimates it will use the machine for six years or about 12,500 total hours. Actual use per year was as follows: Year 1 Hours Used 2,900 2 1,800 3 1,900 4 2,100 5 6 1,900 1,900 2. Prepare a depreciation schedule for six years using the double-declining-balance method. (Do not round your intermediate calculations.) UNIVERSITY CAR WASH Depreciation Schedule-Double-Declining-Balance End of Year Amounts Depreciation Year Expense 1 2 3 4 5 Accumulated Depreciation Book Value
A paper company paid $4,00,000 at the start of a project to clear an area of land and plant some young pine trees. The trees will mature in 10 years, at that time what will be the value of forest? If these costs will be incurred for plantation and clear the land i) They required $20,000 at the start of every year for medicine and spray for the land. ii) Salariesof the gardeners' $10,000 paid at the end of each year What should be the value of the forest if interest rate is 15%? Required: What should be the value of the forest if interest rate is 15%?
The Ajax Specialty Items Corporation has received a 5-year contract to produce a new product. To do the necessary machining operations, the company is considering two alternatives. Alternative A involves continued use of the currently owned lathe. The lathe was purchased 5 years ago for $20,000. Today the lathe is worth $8,000 on the used machinery market. If this lathe is to be used, special attachments must be purchased at a cost of $3,500. At the end of the 5-year contract, the lathe (with attachments) can be sold for $2,000. Operating and maintenance costs will be $7,000/year if the old lathe is used. Alternative B is to sell the currently owned lathe and buy a new lathe at a cost of $25,000. At the end of the 5-year contract, the new lathe will have a salvage value of $13,000. Operating and maintenance costs will be $4,000/year for the new lathe. Using an annual worth analysis, should the firm use the currently owned lathe or buy a new lathe? Base your analysis on a minimum…
Required information [The following information applies to the questions displayed below.] University Car Wash purchased new soap dispensing equipment that cost $222,000 including installation. The company estimates that the equipment will have a residual value of $21,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows: Year 123456 Hours Used 2,700 1,500 1,600 2,400 2,200 1,600 2. Prepare a depreciation schedule for six years using the double-declining-balance method. (Do not round your intermediate calculations.) UNIVERSITY CAR WASH Depreciation Schedule-Double-Declining-Balance
Assume Plain Ice Cream Company, Incorporated, in Ithaca, NY, bought a new ice cream production kit (pasteurizer/homogenizer, cooler, aging vat, freezer, and filling machine) at the beginning of the year at a cost of $22,000. The estimated useful life was four years, and the residual value was $2,000. Assume that the estimated productive life of the machine was 10,000 hours. Actual annual usage was 4,000 hours in Year 1; 3,000 hours in Year 2; 2,000 hours in Year 3; and 1,000 hours in Year 4. Required: 1. Complete a separate depreciation schedule for each of the alternative methods. a. Straight-line. b. Units-of-production. c. Double-declining-balance. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Year At acquisition 1 2 3 4 Req 1C Complete a depreciation schedule using the straight-line method. Depreciation Accumulated Expense Net Depreciation Book Value
[The following information applies to the questions displayed below.] Quick Copy purchased a new copy machine. The new machine cost $106,000 including installation. The company estimates the equipment will have a residual value of $26,500. Quick Copy also estimates it will use the machine for four years or about 8,000 total hours. Actual use per year was as follows: Year Hours Used 1 2,800 2 2,000 3 2,000 4 3,200 Problem 7-5B (Algo) Part 3 3. Prepare a depreciation schedule for four years using the activity-based method. (Round your "Depreciation Rate" to 3 decimal places and use this amount in all subsequent calculations. Round answers to the nearest whole dollar.) > Answer is complete but not entirely correct. QUICK COPY Depreciation Schedule-Activity-Based End of Year Amounts Depreciation Accumulated Year 1 Book Value Expense Depreciation $ 27,825 $ 27,825 $ 78,175 2 19,876 47,700 58,325 X 3 19,876 67,575 38,450 x 4 31,800 x 99,375 5,125 x Total $ 99,377
Required information [The following information applies to the questions displayed below.] University Car Wash purchased new soap dispensing equipment that cost $249,000 including installation. The company estimates that the equipment will have a residual value of $25,500. University Car Wash also estimates it will use the machine for six years or about 12,500 total hours. Actual use per year was as follows: Year 1 2 Year 1 2 3 4 5 6 Total 23456 3 4 5 6 Hours Used 2,900 1,800 1,900 2,100 1,900 1,900 2. Prepare a depreciation schedule for six years using the double-declining- balance method. (Do not round your intermediate calculations.) UNIVERSITY CAR WASH Depreciation Schedule-Double-Declining-Balance End of Year Amounts Depreciation Accumulated Expense Depreciation Book Value
On January 1, Celebrity Allures Inc. bought a new popcorn popper for one of their movie theaters. The popper cost $6,000. The expected life is 5 years with a salvage value of $500. The popper is expected to produce 50,000 buckets of popcorn over its life. In the first year, the popper produced 9,000 buckets of popcorn. In the second year, the popper produced 12,000 buckets of popcorn. What is the accumulated depreciation after the second year on the popcorn popper assuming double declining balance depreciation? $2,200 $3,840 $1,440 $2,400

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