New Style Corporation is a company that manufactures and sells chairs. On 1/1/20, the company purchases a piece of manufacturing equipment for $3,100,000 cash. The expected residual value is $200,000 and the useful life is 5 years. The company expects to produce 5,000,000 chairs with the equipment – 1,200,000 chairs in 2020; 1,400,000 chairs in 2021; 1,000,000 chairs in 2022; and 600,000 chairs 2023; and 800,000 chairs in 2024. Show your work. Round per unit to the nearest cent.Assume that New Style Corporation uses the Double-Declining-Balance method of depreciation. **Depreciation Table for New Style Corporation**Assume that New Style Corporation uses the *Double-Declining-Balance* method of depreciation.| Year | 2020 | 2021 | 2022 | 2023 | 2024 ||------|------|------|------|------|------|| **Depreciation Expense for the year** | | | | | || **Accumulated Depreciation at year-end** | | | | | || **PPE, Net on year-end Balance Sheet** | | | | | |**Explanation:**This table is designed to track the depreciation calculations for New Style Corporation using the Double-Declining-Balance method over a five-year period from 2020 to 2024. Each year includes three main financial metrics:1. **Depreciation Expense for the year**: This row will be used to record the annual depreciation cost for each year. 2. **Accumulated Depreciation at year-end**: This row will show the total depreciation accumulated by the end of each year. 3. **PPE, Net on year-end Balance Sheet**: This row will display the net value of the property, plant, and equipment (PPE) as it appears on the year-end balance sheet. This is calculated as the initial cost of the assets minus the accumulated depreciation. The Double-Declining-Balance method is an accelerated depreciation method which doubles the normal straight-line rate, leading to higher depreciation expenses in the earlier years of an asset's life.

Double declining depreciation rate = Straight line depreciation rate x 2 = (100/5 years) x 2 = 40% Years 2020 2021 2022 2023 2024 Beginning balance 31,00,000 18,60,000 11,16,000 6,69,600 4,01,760 Depreciation expense for the year (Beginning balance x 40%) 12,40,000 7,44,000 4,46,400 2,67,840 1,60,704 Accumulated depreciation at year end 12,40,000 19,84,000 24,30,400 26,98,240 28,58,944 PPE, Net on year end Balance sheet 18,60,000 11,16,000 6,69,600 4,01,760 2,41,056

Answered: New Style Corporation is a company that…

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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New Style Corporation is a company that manufactures and sells chairs. On 1/1/20, the company purchases a piece of manufacturing equipment for $3,100,000 cash. The expected residual value is $200,000 and the useful life is 5 years. The company expects to produce 5,000,000 chairs with the equipment – 1,200,000 chairs in 2020; 1,400,000 chairs in 2021; 1,000,000 chairs in 2022; and 600,000 chairs 2023; and 800,000 chairs in 2024.

Show your work. Round per unit to the nearest cent.

Assume that New Style Corporation uses the Double-Declining-Balance method of depreciation.

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