Depreciation Methods Gruman Company purchased a machine for $220,000 on January 2, 2019. It made the following estimates: Service life 5 years or 10,000 hours Production 200,000 units Residual value $20,000 In 2019, Gruman uses the machine for 1,800 hours and produces 44,000 units. In 2020, Gruman uses the machine for 1,500 hours and produces 35,000 units. If required, round your final answers to the nearest dollar. Required: 1. Compute the depreciation for 2019 and 2020 under each of the following methods: a. Straight-line method 2019 $ 2020 S b. Sum-of-the-years'-digits method 2019 $ 2020 $ c. Double-declining-balance method 2019 $ 2020 $ d. Activity method based on hours worked 2019 $ 2020 $ e. Activity method based on units of output

Depreciation Methods Gruman Company purchased a machine for $220,000 on January 2, 2019. It made the following estimates: Service life 5 years or 10,000 hours Production 200,000 units Residual value $20,000 In 2019, Gruman uses the machine for 1,800 hours and produces 44,000 units. In 2020, Gruman uses the machine for 1,500 hours and produces 35,000 units. If required, round your final answers to the nearest dollar. Required: 1. Compute the depreciation for 2019 and 2020 under each of the following methods: a. Straight-line method 2019 $ 2020 S b. Sum-of-the-years'-digits method 2019 $ 2020 $ c. Double-declining-balance method 2019 $ 2020 $ d. Activity method based on hours worked 2019 $ 2020 $ e. Activity method based on units of output

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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Lux Inc. recently purchased some production equipment that they would take possession as of February 1, 2021. The total purchase price for the equipment is $175,000 and they expect the residual value to be $25,000. The equipment is expected to have an estimated useful life of 5 years. Lux Inc. has a fiscal year end of December 31st. Required - a. What is the production equipment's depreciation expense for the year ending December 3, 2021, if they apply: i. straight-line method? ii) declining balance method for 2021 and 2022 assuming a 20% rate? b. On January 1, 2023, the company decided to make improvements to the production equipment and believe the total its estimated life will now be a total of 8 years and the residual value be $15,000. What is the depreciation expense for the year ending December 31, 2023, assuming the company uses the straight-line method? Assume that the 2021 and 2022 depreciation expenses were recorded correctly. c. On January 1, 2025 Lux Inc. sold the…
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Bramble Corp. purchased Machine no. 201 on May 1, 2020. The following information relating to Machine no. 201 was gathered at the end of May: Price Credit terms Freight-in costs Preparation and installation costs Labour costs during regular production operations $72,000 2/10, n/30 $700 $3,200 $9,000 It was expected that the machine could be used for 10 years, after which the residual value would be zero. However, Bramble intends to use the machine for only eight years and expects to then be able to sell it for $1,500. The invoice for Machine no. 201 was paid on May 5, 2020. Bramble has a December 31 year end. Depreciation expense should be calculated to the nearest half month. Bramble follows IFRS for financial statement purposes. Calculate the depreciation expense for the years indicated using the following methods. (Do not round intermediate calculations and round final answers to O decimal places, e.g. 5,275.) 1. Straight-line method for the fiscal years ended December 31, 2020 and…
Can you also show me how to do this one? 12. XYZ Co. purchased new trucks at the beginning of 2018 for $600,000. The trucks had an estimated life of four yearsand an estimated residual value of $50,000. They use straight-line depreciation. At the beginning of 2019, XYZ sold thetrucks for $480,000 and purchased new trucks for $700,000.A. Calculate book value of the trucks at the end of 2018.B. Calculate the gain (loss) on the sale of the trucks at the beginning of 2019. Calculate the amount and indicate if it is a gain or a loss.
Swann Company sold a delivery truck on April 1, 2019. Swann had acquired the truck on January 1, 2015, for $40,500. At acquisition, Swann had estimated that the truck would have an estimated life of 5 years and a residual value of $3,000. Swann uses the straight-line method of depreciation. At December 31, 2018, the truck had a book value of $10,500. Required: 1. Prepare any necessary journal entries to record the sale of the truck, assuming it sold for: a. $9,875 b. $7,275 2. How should the gain or loss on disposal be reported on the income statement? 3. Assume that Swann uses IFRS and sold the truck for $9,875. In addition, Swann had previously recorded a revaluation surplus related to this machine of $5,000. What journal entries are required to record the sale?