Banko Incorporated manufactures sporting goods. The following information applies to a machine purchased on January 1, Year 1. Purchase price Delivery cost $58,000 $5,000 $3,000 Installation charge. Estimated life Estimated units Salvage estimate 150,000 $6,000 During Year 1, the machine produced 46,000 units, and during Year 2 it produced 48,000 units. Required 5 years a. Determine the amount of depreciation expense for Year 1 and Year 2 using straight-line method. b. Determine the amount of depreciation expense for Year 1 and Year 2 using double-declining-balance method. c. Determine the amount of depreciation expense for Year 1 and Year 2 using units of production method. d. Determine the amount of depreciation expense for Year 1 and Year 2 using MACRS assuming that the machine is clar

Banko Incorporated manufactures sporting goods. The following information applies to a machine purchased on January 1, Year 1. Purchase price Delivery cost $58,000 $5,000 $3,000 Installation charge. Estimated life Estimated units Salvage estimate 150,000 $6,000 During Year 1, the machine produced 46,000 units, and during Year 2 it produced 48,000 units. Required 5 years a. Determine the amount of depreciation expense for Year 1 and Year 2 using straight-line method. b. Determine the amount of depreciation expense for Year 1 and Year 2 using double-declining-balance method. c. Determine the amount of depreciation expense for Year 1 and Year 2 using units of production method. d. Determine the amount of depreciation expense for Year 1 and Year 2 using MACRS assuming that the machine is clar

Name: Banko Incorporated manufactures sporting goods. The following informa
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Description: Banko Incorporated manufactures sporting goods. The following information applies to a machine purchased on January 1, Year 1.Purchase priceDelivery costInstallation chargeEstimated lifeEstimated unitsSalvage estimateDuring Year 1, the machine produ

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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Dexter Industries purchased packaging equipment on January 8 for $392,400. The equipment was expected to have a useful life of four years, or 6,000 operating hours, and a residual value of $32,400. The equipment was used for 2,100 hours during Year 1, 1,260 hours in Year 2, 1,680 hours in Year 3, and 960 hours in Year 4. Required: 1. Determine the amount of depreciation expense for the four years ending December 31 by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method. Round the answer for each year to the nearest whole dollar.
Lord Company purchased a machine on January 2, Year 1, for $70,000. The machine had an expected residual value of $10,000, an expected life of 8 years or 24,000 hours, and a capacity to produce 100,000 units. During Year 1, Lord produced 12,000 units in 2,500 hours. In Year 2, Lord produced 15,000 units in 3,000 hours. c. Prepare a schedule showing depreciation expense for Year 1 and Year 2 and the book value of the asset at the end of Year 1 and Year 2 for the activity method based on units of output. LORD COMPANYDepreciation ScheduleActivity method: Units of output Beginning Book Value Depreciation Ending Book Value Year 1 $fill in the blank 6a1d42016fd5fd8_1 $fill in the blank 6a1d42016fd5fd8_2 $fill in the blank 6a1d42016fd5fd8_3 Year 2 $fill in the blank 6a1d42016fd5fd8_4 $fill in the blank 6a1d42016fd5fd8_5 $fill in the blank 6a1d42016fd5fd8_6
Ginsberg Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $94,500. The machine's useful life is estimated at 8 years, with a salvage value of $12,300. Cost Estimated useful life Salvage value Compute depreciation expense for year Compute depreciation expense for year $94,500 8 years $12,300 1 2 Required: Determine the machine's first-year depreciation using the double-declining-balance function. Determine the machine's second-year depreciation using the double-declining-balance function. Verify the machine's first-year depreciation WITHOUT using the double-declining-balance function. Verify the machine's second-year depreciation WITHOUT using the double-declining-balance function. $23,625 $17,719
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Denver Co. purchased equipment for $225,000 on 12/1/x1. It is estimated that the equipment will have a useful life of 7 years and a residual value of $5,000. Estimated production is 30,000 units and estimated working hours are 25,000. During the month of December in 20x1, Denver used the equipment for 515 hours and the equipment produced 1,200 units. Compute depreciation expense under each of the following methods. Denver is on a calendar-year basis ending December 31, and is using the half-month convention. a) Sum-of-the-years' method for 20x2 (1/1/x2 ~ 12/31/x2) b) Double-declining balance method for 20x3 (1/1/x3 ~ 12/31/x3) c) Activity method (units of output) for 20x1 (12/1/x1 ~ 12/31/x1) d) Straight-line for 20x1(12/1/x1 ~ 12/31/x1)
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