On January 1, Alamo Cranes purchased a crane for $140,000. Alamo expects the crane to remain useful for six years (1,000,000 lifts) and to have a residual value of $2,000. The company expects the crane to be used for 80,000 lifts the first year. Read the requirements LOADING... . a. Compute the first-year depreciation expense on the crane using the straight-line method. Begin by selecting the formula to calculate the company's first-year depreciation on the crane using the straight-line method. Then enter the amounts and calculate the depreciation for the first year. ( Cost - Residual value ) ÷ Useful life = Straight-line depreciation ( $140,000 - $2,000 ) ÷ 6 = $23,000 b. Compute the first-year depreciation expense on the crane using the units-of-production method. Before calculating the first-year depreciation on the crane using the units-of-production method, calculate the depreciation expense per unit. Select the formula, then enter the amounts and calculate the depreciation per unit. (Round depreciation per unit to two decimals, X.XX.) ( Cost - Residual value ) ÷ Useful life in units = Depreciation per unit ( $140,000 - $2,000 ) ÷ 1,000,000 = $0.14 Now, select the formula, enter the amounts, and calculate the company's first-year depreciation on the crane using the units-of-production method. (Round depreciation expense to the nearest whole dollar.) Depreciation per unit × Current year usage = Units-of-production depreciation 0.14 × 80,000 = $11,200 c. Compute the first-year and second-year depreciation expense on the crane using the double-declining-balance method. Begin by selecting the formula to calculate the company's first-year and second-year depreciation on the crane using the double-declining-balance method. Then enter the amounts and calculate the depreciation for the first year. Finally, enter the amounts and calculate the depreciation for the second year. (Enter "0" for items with a zero value. Do not round the interim calculation. Round depreciation expense to the nearest whole dollar.) ( - ) × = Double-declining- balance depreciation
On January 1, Alamo Cranes purchased a crane for $140,000. Alamo expects the crane to remain useful for six years (1,000,000 lifts) and to have a residual value of $2,000. The company expects the crane to be used for 80,000 lifts the first year. Read the requirements LOADING... . a. Compute the first-year depreciation expense on the crane using the straight-line method. Begin by selecting the formula to calculate the company's first-year depreciation on the crane using the straight-line method. Then enter the amounts and calculate the depreciation for the first year. ( Cost - Residual value ) ÷ Useful life = Straight-line depreciation ( $140,000 - $2,000 ) ÷ 6 = $23,000 b. Compute the first-year depreciation expense on the crane using the units-of-production method. Before calculating the first-year depreciation on the crane using the units-of-production method, calculate the depreciation expense per unit. Select the formula, then enter the amounts and calculate the depreciation per unit. (Round depreciation per unit to two decimals, X.XX.) ( Cost - Residual value ) ÷ Useful life in units = Depreciation per unit ( $140,000 - $2,000 ) ÷ 1,000,000 = $0.14 Now, select the formula, enter the amounts, and calculate the company's first-year depreciation on the crane using the units-of-production method. (Round depreciation expense to the nearest whole dollar.) Depreciation per unit × Current year usage = Units-of-production depreciation 0.14 × 80,000 = $11,200 c. Compute the first-year and second-year depreciation expense on the crane using the double-declining-balance method. Begin by selecting the formula to calculate the company's first-year and second-year depreciation on the crane using the double-declining-balance method. Then enter the amounts and calculate the depreciation for the first year. Finally, enter the amounts and calculate the depreciation for the second year. (Enter "0" for items with a zero value. Do not round the interim calculation. Round depreciation expense to the nearest whole dollar.) ( - ) × = Double-declining- balance depreciation
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
On
January
1,
Alamo
Cranes purchased a crane for
$140,000.
Alamo
expects the crane to remain useful for
six
years
(1,000,000
lifts) and to have a residual value of
$2,000.
The company expects the crane to be used for
80,000
lifts the first year.Read the
requirements
LOADING...
.a. Compute the first-year depreciation expense on the crane using the straight-line method.
Begin by selecting the formula to calculate the company's first-year depreciation on the crane using the straight-line method. Then enter the amounts and calculate the depreciation for the first year.
|
(
|
Cost
|
-
|
Residual value
|
) ÷
|
Useful life
|
=
|
Straight-line depreciation
|
|
(
|
$140,000
|
-
|
$2,000
|
) ÷
|
6
|
=
|
$23,000
|
b. Compute the first-year depreciation expense on the crane using the units-of-production method.
Before calculating the first-year depreciation on the crane using the units-of-production method, calculate the depreciation expense per unit. Select the formula, then enter the amounts and calculate the depreciation per unit. (Round depreciation per unit to two decimals, X.XX.)
|
(
|
Cost
|
-
|
Residual value
|
) ÷
|
Useful life in units
|
=
|
Depreciation per unit
|
|
(
|
$140,000
|
-
|
$2,000
|
) ÷
|
1,000,000
|
=
|
$0.14
|
Now, select the formula, enter the amounts, and calculate the company's first-year depreciation on the crane using the
units-of-production method. (Round depreciation expense to the nearest whole dollar.)
|
Depreciation per unit
|
×
|
Current year usage
|
=
|
Units-of-production depreciation
|
|
0.14
|
×
|
80,000
|
=
|
$11,200
|
c. Compute the first-year and second-year depreciation expense on the crane using the double-declining-balance method.
Begin by selecting the formula to calculate the company's first-year and second-year depreciation on the crane using the double-declining-balance method. Then enter the amounts and calculate the depreciation for the first year. Finally, enter the amounts and calculate the depreciation for the second year. (Enter "0" for items with a zero value. Do not round the interim calculation. Round depreciation expense to the nearest whole dollar.)
|
|
(
|
|
-
|
|
) ×
|
|
=
|
Double-declining-
balance depreciation |
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