For the corporation I have created I need to prepare depreciation schedules for straight-line, double-declining-balance, and units-of-production methods. Use the imformation below and the images attached: +in one of the attached images is to give more information for the units-of-production method. The Corporation has purchased a new piece of factory equipment on January 1, 2024. The equipment costs $620,000 and has an estimated useful life of four years, or 12,000 machine hours. At the end of four years, the equipment is estimated to have a residual value of $60,000. At December 31, 2024, the corporation is trying to determine if it should sell the factory equipment. The corporation will only sell the factory equipment if the company earns a gain of at least $16,000. For each of the depreciation methods, what is the minimum amount that Fraser River will sell the factory equipment for in order to have a gain of $16,000?
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.
For the corporation I have created I need to prepare
+in one of the attached images is to give more information for the units-of-production method.
The Corporation has purchased a new piece of factory equipment on January 1, 2024. The equipment costs $620,000 and has an estimated useful life of four years, or 12,000 machine hours. At the end of four years, the equipment is estimated to have a residual value of $60,000.
At December 31, 2024, the corporation is trying to determine if it should sell the factory equipment. The corporation will only sell the factory equipment if the company earns a gain of at least $16,000. For each of the depreciation methods, what is the minimum amount that Fraser River will sell the factory equipment for in order to have a gain of $16,000?
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