Answered: DEPREC Depreciation Data Section…

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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DEPRECIATION (Deprec): Dunedin Drilling Company recently acquired a new machine at a cost of $350,000. The machine has an estimated useful life of four years or 100,000 hours, and a salvage value of $30,000. This machine will be used 30,000 hours during Year 1, 20,000 hours in Year 2, 40,000 hours in Year 3, and 10,000 hours in Year 4. Worksheet: The problem thus far has assumed that assets are depreciated a full year in the year acquired. Normally, depreciation begins in the month acquired. For example, an asset acquired at the beginning of April is depreciated for only nine months in the year of acquisition. Modify the DEPREC2 worksheet to include the month of acquisition as an additional item of input. To demonstrate proper handing of this factor on the depreciation schedule, modify the formulas for the first two years. Some of the formulas may not actually need to be revised. Do not modify the formulas for Year 3 through Year 8 and ignore the numbers shown in those years. Some will be incorrect as will be some of the totals. Hint: insert the month in row 6 of the Data Section specifying the month by a number (e.g., April is the fourth month of the year). Redo the formulas for Years 1 and 2. For the units of production method, assume no change in the estimated hours for both years. Attached is what the DEPREC 2 sheet looks like and the formulas used before modifications. Please show the formulas you use so I can understand. Thank you!!

$ • % 9
Paste
B IU v
A
C
E
F
H
2
DEPREC
3
Depreciation
4
5
Data Section
6
$350,000
$30,000
7
Cost of asset
Estimated salvage value
Estimated useful life in years
Estimated life in units (miles, etc.)*
8
9
4
10
100,000
11
12
*Estimated
13
Year
Units
14
1
30,000
15
2
20,000
40,000
10,000
16
3
17
18
5
19
6
20
7
21
8
22
23
Answer Section
24
25
Depreciation Expense
26
Double
27
Units of
Straight
Line
Declining
28
Year
Production
Balance
$80,000
80,000
80,000
80,000
$96,000
64,000
128,000
32,000
$175,000
87,500
43,750
13,750
29
1
30
2
31
3
32
33
34
35
36
8
37
Total
$320,000
$320,000
$320,000
38
39
40
Year
41
1 SLN(D7,D8,D9) ((D7-D8)/D10)*C14 DDB(D7,D8,D9,B29)
2 SLN(D7,D8,D9 ((D7-D8)/D10)*C15 DDB(D7,D8,D9,B30)
3 SLN(D7,D8,D9) ((D7-D8)/D10)*C16 IF(B31=D9,D7-D8-SUM(E29:E30),DDB(D7,D8,D9,B31))
4 SLN(D7,D8,D9) ((D7-D8)/D10)*C17 IF(B31=D9,D7-D8-SUM(E29:E31),DDB(D7,D8,D9,B32))
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7
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8
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