Blossom Limited purchased four articulated robots on account on May 1, 2024, at an invoice price of $524,000. On May 2, it paid $4,000 for delivery of the robots. A one-year, $5,500 insurance policy on the robots was purchased on May 3. On May 30, Blossom paid $10,000 for assembly, installation and testing of each robot on a production line. The robots started operating or were ready for use on July 1 Blossom estimates the useful life of the robots will be four years or 10,000 units with a residual value of $90,000. Assume the robots collectively produce the following numbers of units each year: 1,500 units in 2024; 2.900 units in 2025; 2.300 units in 2026: 2,300 units in 2027; and 1,000 units in 2028. Blossom has a December 31 year end. (a) Your Answer Correct Answer (Used) Determine the total cost of the robots. Cost of the robots 5 $38,000 (b) Calculate the annual depreciation and total depreciation over the robots' lives using the: (Round the depreciation cost per unit to 2 decimal places, eg. 25.51 and final answers to O decimal places, eg. 5,275) (1) Straight-line method Year Depreciable Amount Depreciation Expense Accumulated Depreciation Carrying Amo 2025 2026 2027 2028 (2) Double-diminishing-balance method Year Opening Carrying Amount 2024 $ Depreciation Expense Accumulated Depreciation Carrying Amo 2025 2026 2027 2028 (3) Units of production method Year 2024 2025 2026 2027 2028 Units-of-Production Depreciation Expense Accumulated Depreciation Carrying Amour $ Which method causes net income to be lower in the early years of the robots' lives?
Blossom Limited purchased four articulated robots on account on May 1, 2024, at an invoice price of $524,000. On May 2, it paid $4,000 for delivery of the robots. A one-year, $5,500 insurance policy on the robots was purchased on May 3. On May 30, Blossom paid $10,000 for assembly, installation and testing of each robot on a production line. The robots started operating or were ready for use on July 1 Blossom estimates the useful life of the robots will be four years or 10,000 units with a residual value of $90,000. Assume the robots collectively produce the following numbers of units each year: 1,500 units in 2024; 2.900 units in 2025; 2.300 units in 2026: 2,300 units in 2027; and 1,000 units in 2028. Blossom has a December 31 year end. (a) Your Answer Correct Answer (Used) Determine the total cost of the robots. Cost of the robots 5 $38,000 (b) Calculate the annual depreciation and total depreciation over the robots' lives using the: (Round the depreciation cost per unit to 2 decimal places, eg. 25.51 and final answers to O decimal places, eg. 5,275) (1) Straight-line method Year Depreciable Amount Depreciation Expense Accumulated Depreciation Carrying Amo 2025 2026 2027 2028 (2) Double-diminishing-balance method Year Opening Carrying Amount 2024 $ Depreciation Expense Accumulated Depreciation Carrying Amo 2025 2026 2027 2028 (3) Units of production method Year 2024 2025 2026 2027 2028 Units-of-Production Depreciation Expense Accumulated Depreciation Carrying Amour $ Which method causes net income to be lower in the early years of the robots' lives?
Chapter1: Financial Statements And Business Decisions
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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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Blossom Limited purchased four articulated robots on account on May 1, 2024, at an invoice price of $524,000. On May 2, it paid
$4,000 for delivery of the robots. A one-year, $5,500 insurance policy on the robots was purchased on May 3. On May 30, Blossom
paid $10,000 for assembly, installation and testing of each robot on a production line. The robots started operating or were ready for
use on July 1
Blossom estimates the useful life of the robots will be four years or 10,000 units with a residual value of $90,000. Assume the robots
collectively produce the following numbers of units each year: 1,500 units in 2024; 2,900 units in 2025; 2.300 units in 2026; 2,300
units in 2027; and 1,000 units in 2028. Blossom has a December 31 year end.
(a)
Your Answer Correct Answer (Used)
Determine the total cost of the robots.
Cost of the robots
$
$38,000
(b)
Calculate the annual depreciation and total depreciation over the robots' lives using the: (Round the depreciation cost per unit to 2
decimal places, eg. 25.51 and final answers to O decimal places, eg. 5,275)
(1) Straight-line method
Year
Depreciable Amount
Depreciation Expense
Accumulated Depreciation
Carrying Amo
2024
$
2025
2026
2027
2028
(2)Double-diminishing-balance method
Year
Opening Carrying Amount
Depreciation Expense
Accumulated Depreciation
Carrying Amo
2024 $
2025
2026
2027
2028
(3) Units-of-production method
Year
Units-of-Production
Depreciation Expense
Accumulated Depreciation
Carrying Amour
2024
$
$
2025
2026
2027
2028
Which method causes net income to be lower in the early years of the robots' lives?
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Step 1: Define the term Depreciation:
VIEWStep 2: a. Determine the total costs of the robots:
VIEWStep 3: b. Compute the annual depreciation and total depreciation using the Straight line method:
VIEWStep 4: Compute the annual depreciation and total depreciation using the Double declining method:
VIEWStep 5: Compute the annual depreciation and total depreciation using the units of production method:
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