Assume Organic Ice Cream Company, Inc., 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 $32,000. The estimated useful life was four years, and the residual value was $3,400. Assume that the estimated productive life of the machine was 11,000 hours. Actual annual usage was 4,400 hours in Year t: 3,300 hours in Year 2; 2,200 hours in Year 3; and 1,100 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.
Assume Organic Ice Cream Company, Inc., 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 $32,000. The estimated useful life was four years, and the residual value was $3,400. Assume that the estimated productive life of the machine was 11,000 hours. Actual annual usage was 4,400 hours in Year t: 3,300 hours in Year 2; 2,200 hours in Year 3; and 1,100 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Assume Organic Ice Cream Company, Inc., 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 $32,000. The estimated useful life was four years, and the residual value
was $3,400. Assume that the estimated productive life of the machine was 11,000 hours. Actual annual usage was 4,400 hours in Year
t 3,300 hours in Year 2; 2,200 hours in Year 3; and 1,100 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 18
Req 1C
Complete a depreciation schedule using the Straight-line method. (Do not round intermediate calculations.)
Depreciation Accumulated
Depreciation
Expense
Net
Book Value
Year
At acquisition
1
2
3
4
<Reg 1A
Req 1B >
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