On January 1, 2024, Waterway Company, a small machine-tool manufacturer, acquired for $2,380,000 a piece of new industrial equipment. The new equipment had a useful life of 5 years, and the salvage value was estimated to be $86,500. Waterway estimates that the new equipment can produce 16,500 machine tools in its first year. It estimates that production will decline by 1,300 units per year over the remaining useful life of the equipment. The following depreciation methods may be used: (1) straight-line, (2) double-declining-balance, (3) sum-of-the-years'-digits, and (4) units-of-output. For tax purposes, the class life is 7 years. Use the MACRS tables for computing depreciation. (a1) Compute accumulated depreciation under the following methods: (1) straight-line, (2) double-declining-balance, (3) sum-of-the- years'-digits, and (4) units-of-output for the 3-year period ending December 31, 2026. Ignore present value, income tax, and deferred income tax considerations. (Round cost per unit to 2 decimal places, e.g. 25.12 and final answers to O decimal places, e.g. 5,125.) Methods 2024 Accumulated Depreciation 2025 $ (1) Straight-line Double-declining- (2) balance Sum-of-the-years (3) $ $ digits (4) Units-of-output $ +A +A $ 2026 $ +A $ +A $
On January 1, 2024, Waterway Company, a small machine-tool manufacturer, acquired for $2,380,000 a piece of new industrial equipment. The new equipment had a useful life of 5 years, and the salvage value was estimated to be $86,500. Waterway estimates that the new equipment can produce 16,500 machine tools in its first year. It estimates that production will decline by 1,300 units per year over the remaining useful life of the equipment. The following depreciation methods may be used: (1) straight-line, (2) double-declining-balance, (3) sum-of-the-years'-digits, and (4) units-of-output. For tax purposes, the class life is 7 years. Use the MACRS tables for computing depreciation. (a1) Compute accumulated depreciation under the following methods: (1) straight-line, (2) double-declining-balance, (3) sum-of-the- years'-digits, and (4) units-of-output for the 3-year period ending December 31, 2026. Ignore present value, income tax, and deferred income tax considerations. (Round cost per unit to 2 decimal places, e.g. 25.12 and final answers to O decimal places, e.g. 5,125.) Methods 2024 Accumulated Depreciation 2025 $ (1) Straight-line Double-declining- (2) balance Sum-of-the-years (3) $ $ digits (4) Units-of-output $ +A +A $ 2026 $ +A $ +A $
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 15PB: Urquhart Global purchases a building to house its administrative offices for $500,000. The best...
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Transcribed Image Text:On January 1, 2024, Waterway Company, a small machine-tool manufacturer, acquired for $2,380,000 a piece of new industrial
equipment. The new equipment had a useful life of 5 years, and the salvage value was estimated to be $86,500. Waterway estimates
that the new equipment can produce 16,500 machine tools in its first year. It estimates that production will decline by 1,300 units per
year over the remaining useful life of the equipment.
The following depreciation methods may be used: (1) straight-line, (2) double-declining-balance, (3) sum-of-the-years'-digits, and (4)
units-of-output. For tax purposes, the class life is 7 years. Use the MACRS tables for computing depreciation.
(a1)
Compute accumulated depreciation under the following methods: (1) straight-line, (2) double-declining-balance, (3) sum-of-the-
years'-digits, and (4) units-of-output for the 3-year period ending December 31, 2026. Ignore present value, income tax, and
deferred income tax considerations. (Round cost per unit to 2 decimal places, e.g. 25.12 and final answers to O decimal places, e.g.
5,125.)
Methods
2024
Accumulated Depreciation
2025
$
(1) Straight-line
Double-declining-
(2)
balance
Sum-of-the-years
(3)
$
$
digits
(4)
Units-of-output
$
+A
+A
$
2026
$
+A
$
+A
$
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