Exercise 9-15 Alternative depreciation methods-partial year's depreciation LO3 CHECK FIGURES: a. 2024 = $22,500; b. 2024 = $35,000 On April 1, 2023, Ice Drilling Co. purchased a trencher for $125,000. The machine was expected to last five years and have a residual value of $12,500. Required Calculate depreciation expense for 2023 and 2024 to the nearest month, using (a) the straight- line method, and (b) the double-declining-balance method. The company has a December 31 year-end.

Exercise 9-15 Alternative depreciation methods-partial year's depreciation LO3 CHECK FIGURES: a. 2024 = $22,500; b. 2024 = $35,000 On April 1, 2023, Ice Drilling Co. purchased a trencher for $125,000. The machine was expected to last five years and have a residual value of $12,500. Required Calculate depreciation expense for 2023 and 2024 to the nearest month, using (a) the straight- line method, and (b) the double-declining-balance method. The company has a December 31 year-end.

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Description: Exercise 9-15 Alternative depreciation methods-partial year's depreciation LO3CHECK FIGURES: a. 2024 = $22,500; b. 2024 = $35,000On April 1, 2023, Ice Drilling Co. purchased a trencher for $125,000. The machine was expected to last fiveyears and hav

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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#10 #2 O 8 O A piece of newly purchased Industrial equipment costs $968,662.00 and is classified as a seven-year property under MACRS. What is the book value of this piece of equipment at the end of year 3? Submit Answer format: Currency: Round to: 2 decimal places. Show Hint A firm purchases a new work cell for $360,489.00. The asset will be depreciated using a 3-year MACRS schedule. What is the book value of the asset after the third year? (Assume that there is no depreciation allowed at year 0) Submit Answer format: Currency: Round to: 2 decimal places. Show Hint A firm buys a piece of equipment for $115,926.00 and will straight-line depreciate it to zero over five years. If the tax rate is 40.00%, what is the present value of the depreciation tax shield if the cost of capital is 11.00%? Submit Answer format: Currency: Round to: 2 decimal places. Show Hint
Problem 4 – Depreciation and Disposal On Jan. 1, 2020, Forsyth Co. acquired a unit of equipment for a total cost of P5,000,000. The entity estimates that during its 10-year useful life, the equipment will be able to produce 500,000 units of its product for 40,000 working hours, and will be sold for scrap. The usage of the equipment from 2020 to 2023 is as follows: Units Produced Hours Used 2020 32,000 2,500 2021 40,000 3,250 2022 45,000 4,200 2023 60,000 4,500 On Jan. 1, 2024, the equipment was sold for P3,250,000. 1. Using the units of output depreciation method: Determine the 2021 depreciation expense Determine the carrying value on December 31, 2022 Determine the gain or loss on disposal on January 1, 2024 а. b. с. 2. Using the working hours depreciation method: Determine the 2021 depreciation expense b. Determine the carrying value on December 31, 2022 Determine the gain or loss on disposal on January 1, 2024 а. с.
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Problem 6-30 Calculating Project NPV Calligraphy Pens is deciding when to replace its old machine. The machine's current salvage value is $2,750,000. Its current book value is $1,650,000. If not sold, the old machine will require maintenance costs of $680,000 at the end of the year for the next five years. Depreciation on the old machine is $330,000 per year. At the end of five years, it will have a salvage value of $125,000 and a book value of $0. A replacement machine costs $4,350,000 now and requires maintenance costs of $350,000 at the end of each year during its economic life of five years. At the end of the five years, the new machine will have a salvage value of $715,000. It will be fully depreciated by the straight- line method. In five years, a replacement machine will cost $3,350,000. The company will need to purchase this machine regardless of what choice it makes today. The corporate tax rate is 24 percent and the appropriate discount rate is 8 percent. The company is…
QS 10-10 (Algo) Computing revised depreciation LO C2 On January 1, the Matthews Band pays $68,800 for sound equipment. The band estimates it will use this equipment for four years and after four years it can sell the equipment for $1,000. Matthews Band uses straight-line depreciation but realizes at the start of the second year that this equipment will last only a total of three years. The salvage value is not changed. Compute the revised depreciation for both the second and third years.
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