On January 1, 2018, Morrow Inc. purchased a spooler at a cost of $40,000. The equipment is expected to last five years and have a residual value of $4,000. During its five-year life. the equipment is expected to produce 250,000 units of product, In 2018-2022, 52,000, 45,000, 60,000, 52,000, and 46,000 units respectively were produced. Required: Compute depreciation expense for 2018 - 2022, and the accumulated depreciation and book value the spooler at December 31, 2018 - 2022, under the various methods: A. Straight-line B. Double-declining-balance C. Sum-of-the-years'-digits D. Units-of-production

On January 1, 2018, Morrow Inc. purchased a spooler at a cost of $40,000. The equipment is expected to last five years and have a residual value of $4,000. During its five-year life. the equipment is expected to produce 250,000 units of product, In 2018-2022, 52,000, 45,000, 60,000, 52,000, and 46,000 units respectively were produced. Required: Compute depreciation expense for 2018 - 2022, and the accumulated depreciation and book value the spooler at December 31, 2018 - 2022, under the various methods: A. Straight-line B. Double-declining-balance C. Sum-of-the-years'-digits D. Units-of-production

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Sunland Company purchased a truck for $46,000. The company expected the truck to have a useful life of four years or 95,000 kilometres, with an estimated residual value of $8,000 at the end of that time. During the first and second years, the truck was driven 21,000 and 27,500 kilometres, respectively. Calculate the depreciation expense for the second year under the straight-line, units-of-production, and double-diminishing-balance methods. Assume the purchase of the truck was made at the beginning of the first month of the first year. (Round depreciation per kilometre to 2 decimal places, e.g. 1.25 and final answers to O decimal places, e.g. 5,275.) Straight-line method Units-of-production method $ GA LA Double-diminishing-balance method $ GA Year 2 Depreciation Expense
Strong Metals Incorporated purchased a new stamping machine at the beginning of the year at a cost of $1,900,000. The estimated residual value was $100,000. Assume that the estimated useful life was five years and the estimated productive life of the machine was 300,000 units. Actual annual production was as follows: Year Units 1 70,000 2 67,000 3 50,000 4 73,000 5 40,000 Required: 1. Complete a separate depreciation schedule for each of the alternative methods. a. Straight-line. b. Units-of-production. c. Double-declining-balance.
Can you show me how to do this one? 14. Assume that ABC Company purchased factory equipment on January 1, 2018, for $75,000. The equipment has an estimated life of five years and an estimated residual value of $6,000. ABC’s accountant is considering whether to use the straight-line or the units-of-production method to depreciate the asset. Because the company is beginning a new production process, the equipment will be used to produce 5,000 units in 2018, but production subsequent to 2018 will increase by 5,000 units each year. Calculate the depreciation expense, accumulated depreciation, and book value of the equipment under both methods for each of the five years of its life. Year Depreciation Accumulated Depreciation Book Value Year Depreciation Accumulated Depreciation Book Value
Calculate depreciation. A machine cost $165,000 on April 28, 2021. Its estimated salvage value is $5,000 and its expected life is eight years. Instructions Prepare a depreciation schedule for each year using each of the following methods, showing the figures used. These schedules should have formulas in the cells referencing the "input section" that was discussed previously. (a) Straight-line (b) Double-declining-balance (c) Sum-of-the-years'-digits
Vik
Anne Company has an equipment costing P700,000 with an estimated residual value of P70,000 and an estimated useful life of six years. After using and depreciating the asset for the past two years, the company upgraded the machine parts and the cost of upgrading amounted to P120,000. Assuming that the upgrading costs extended the asset’s economic useful life by an additional two years, what is the revised depreciation expense for the third year using the (1) straight-line method and (2) sum-of-the-years’ digits method? a. (1) P90,000 and (2) P140,000 b. (1) P90,000 and (2) P120,000 c. (1) P101,667 and (2) P140,000 d. (1) P101,667 and (2) P120,000
Rufiel Corporation purchased a new machine on JULY 1, 2020. The machine cost $40,000 and had an estimated salvage value of $4,000. (NOTE THE PURCHASE DATE IS JULY 1, 2020) Inverness estimated that the machine will have a useful life of 6 years or 100,000 units. Inverness uses the machine in its manufacturing operations and produces 20,000 units in Year 1, 33,000 units in Year 2 and 19,000 units in Year 3, 17,000 units in Year 4 and 6,000 units in Year 5 and 5,000 units in Year 6. b) Indicate what is the balance of Accumulated Depreciation at the end of each year using the Units-of-Production Method
In August 2020, Heavy-lift Helicopters Ltd. purchased a new helicopter for its logging and heavy lift operations at a cost of $1.056 million. Based on past experience, management has determined that the helicopter will have a useful life of 13,000 flying hours, at which time it will have an estimated residual value of $250,000. During 2020, the helicopter was used for 1,300 flying hours, and in 2021 it was used for 1,600 flying hours. Heavy-lift Helicopters has a December 31 year end and uses the units-of-production method of depreciation for its helicopters. Determine the depreciation expense on this helicopter for 2021 and its carrying amount at December 31, 2021. 2021 Depreciation expense %24 Carrying amount 24 eTextbook and Media Save for Later
The cost of equipment purchased by Concord, Inc., on April 1, 2020, is $127,00O. It is estimated that the machine will have a $7,000 salvage value at the end of its service life. Its service life is estimated at 6 years; its total working hours are estimated at 40,000; and its total production is estimated at 480,000 units. During 2020, the machine was operated 3,500 hours and produced 48,000 units. During 2021, the machine was operated 5,600 hours and produced 55,000 units. Compute depreciation expense on the machine for the year ending December 31, 2020, and the year ending December 31, 2021, using the following methods. (Round depreciation per unit to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 45,892.) 2020 2021 (a) Straight-line 2$ 24 (b) Units-of-output %24 24 (c) Working hours 24 (d) Sum-of-the-years'-digits 24 (e) Double-declining-balance (twice the straight-line rate) 24 2$ %24 %24
An industrial equipment is purchased for $300,000. It is expected to work for 12 years before it is sold for $50,000. Moreover, the annual cost of maintaining this equipment is estimated to be $20,000. Given those information and MARR-10%, answer Questions 1-4 below: For all questions, you are required to show all calculations. 1) Use the switchover technique of 150% DB to depreciate this equipment during its service life 2) Use the Corporate Federal Tax (2006) to construct the AFTCF given the calculations obtained in Question 1 and annual revenue of $150,000 3) Use 25% income tax rate to construct the AFTCF given the calculations obtained in Question 1 and annual revenue of $150,000 4) Calculate the PWs of the two cashflows obtained in Questions 2 & 3
At the beginning of 2021, Terra Lumber Company purchased a timber tract from Boise Cantor for $3,200,000. After the timber is cleared, the land will have a residual value of $600,000. Roads to enable logging operations were constructed and completed on March 30, 2021. The cost of the roads, which have no residual value and no alternative use after the tract is cleared, was $240,000. During 2021, Terra logged 500,000 of the estimated five million board feet of timber.Required:Calculate the 2021 depletion of the timber tract and depreciation of the logging roads assuming the units-ofproduction method is used for both assets.
Telimos purchased a machinery for 315,000 on May 1,2017. It is estimated that it will have a useful life of 10 years,salvage value of 15,000, production of 240,000 units, and workinghours of 25,000. During 2018 it uses the machinery for 2,650 hours, and the machinery produces 25,500 units. From the information given, compute the depreciation charge for 2018 under each of the following methods. (Round to the nearest dollar.) as per units of output, working hours and declining balance method with 20% as annual rate.