Depreciation ($28,150+ 5 years) Insurance Garage rent Automobile tax and license Variable operating cost $ 5,630 $ 2,900 $1,500 Required: $770 $ 0.07 per mile The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage. the car will have zero resale value in five years, so the annual straight-line depreciation is $5,630. The car is kept in a garage for a monthly fee.

Depreciation ($28,150+ 5 years) Insurance Garage rent Automobile tax and license Variable operating cost $ 5,630 $ 2,900 $1,500 Required: $770 $ 0.07 per mile The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage. the car will have zero resale value in five years, so the annual straight-line depreciation is $5,630. The car is kept in a garage for a monthly fee.

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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The value of a piece of equipment depreciates exponentially. It cost $250,000 new. Each year it depreciates at a rate of 11% of its original purchase price. Determine the value of this equipment after 5 years. Round to the nearest dollar. ANS 8)
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Polaris Transportation wants to replace its old fleet of vehicles and purchase 6 new vehicles. Information about these vehicles is listed below: • Purchase price: $29,850 per vehicle • PST: $2,388 per vehicle • GST: $1,493 per vehicle • New tires and brakes for all six vehicles: $4,500 total. • Estimated annual costs for oil changes and regular maintenance: $120 per vehicle Before investing in new vehicles, Polaris must dispose of their current fleet of 5 vehicles that were purchased on April 1, 2016 at a total cost of $285,000. When purchased, the old vehicles were expected to have a life of 6 years with a residual value of $2,000 per vehicle. Disposal of the old vehicles will occur on September 1, 2020, to coincide with the arrival of the new vehicles. Polaris has a December 31st year end and records depreciation expense annually. Required: Part A Treat the following situations independently and round all your numbers to the 2nd decimal place. Prepare the journal entries to dispose…
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