Problem #2: Fixed Assets Valuations-DepreciationMethods In recent years, Blue Transportationpurchased three trucks on January 1, 2024. Becauseof frequent turnover in the accounting department, adifferent accountant selected the depreciation methodfor each bus, and various methods were selected.Information concerning the buses is summarized asfollows. Truck #1 Cost: $ 130,000; Salvage Value $10,000, Number of Years: 8; Depreciation Method:Straight-line Truck # 2: Cost: 41,000, Salvage Value:1,000; Number of Years: 5; Depreciation Method:Declining - balance Truck # 3: Cost: 102,000 SalvageValue: $8,000; number of years: 6; DepreciationMethod: Units - of- activity For the declining - balancemethod, the company uses the double-declining rate.For the units of activity method, total miles areexpected to be 120,000. Actual miles of use in the first3 years were 2024, 24,000; 2025, 34,000; and2026, 30,000. Instructions (a) Compute the amount ofaccumulated depreciation on each bus at December31, 2024. (b) what are the depreciation expenses forall three buses in (1) 2024 and (2) 2025 and(3) 2026? (c) Make journal entries for 2025 and 2026under Double Declining Method

The objective of the question is to calculate the accumulated depreciation on each truck at December…

Answered: Problem #2: Fixed Assets…

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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Comparing Three Depreciation Methods Waylander Coatings Company purchased waterproofing equipment on January 6 for $248,600. The equipment was expected to have a useful life of four years, or 7,600 operating hours, and a residual value of $20,600. The equipment was used for 2,900 hours during Year 1, 2,400 hours in Year 2, 1,400 hours in Year 3, and 900 hours in Year 4. Required: 1. Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method.Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar. Depreciation Expense Year Straight-Line Method Units-of-Output Method Double-Declining-Balance Method Year 1 $fill in the blank 1 $fill in the blank 2 $fill…
Depreciation by Two Methods; Sale of Fixed Asset New tire retreading equipment, acquired at a cost of $625,000 on September 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $53,700. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected. In the first week of the fifth year, on September 6, the equipment was sold for $91,500. Required: 1. Determine the annual depreciation expense for each of the estimated four years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the following methods: a. Straight-line method Year DepreciationExpense Accumulated Depreciation,End of Year Book Value,End of Year 1 $fill in the blank 45f9c5fa9ffcfe6_1 $fill in the blank…
AUBURN CAR WASH Cost of new car wash machines: $800,000 Estimated residual value: $50,000 Machine life in years:5 Machine life in hours: 10,000 Actual use per year: Year Hours used 1 2,000 2 1,800 3 2,200 4 2,100 5 1,900 Use the information on the Given Data worksheet to prepare three depreciation schedules using the following methods: straight-line, double - declining balance, and activity - based. Auburn Car Wash Straight Line If you hover your mouse over a cell with a red flag you will see the comment Auburn Car Wash Double - Declining - Balance If you hover your mouse over a cell with a red flag you will see the comment Note: for year 5 you must make the year end book value equal to the Residual Value Therefore you will need to take the beginning book value less the Residual Value Auburn Car Wash Activity - Based When you have completed all three schedules answer the following question. What do you observe about the Book Value at the end of the 5th year for all three methods? Type…
Depreciation Choices and Outcome. Mulligan Co. purchased a new machine on January 1. The following information pertains to the purchase: Life of asset Salvage value Purchase price Sales tax Freight cost Electrical set-up Custom programming Estimated annual labor savings Additional revenue generated a. Determine the capitalized cost of the new machine $84600 b. Compute annual depreciation, accumulated depreciation and the machine's book value for the first three year assuming: i. Straight-line depreciation ii. Double-declining-balance method Year 1 Year 2 Year 3 Straight-Line Depreciation Double-Declining Balance Depreciation Accumulated Book Value at Depreciation Accumulated Book Value at Expense Depreciation Year-end Expense Depreciation Year-End $ 5 years $9,000 54,000 3,000 2,400 2,100 1,500 10,500 24,000 0 $ 0 0 Straight-line $ Double-declining $ 0 0 0 0 0 $ 0 $ 0 0 i. Straight-line depreciation ii. Double-declining balance method Do not use negative signs with your answers below.…
Depreciation by different methods, and sale of a fixed asset New machines were purchased by Nunez Co. on January 1 for $300,000. The equipment was expected to have a useful life of four years and an estimated salvage value of $40,000. Required: 1. Determine the annual depreciation expense for each of the four years under A. The Straight-line method Year 1 $65,000 Year 2 $65,000 Year 3 $65,000 Year 4 $65,000 B. The double-declining balance method Beg. BV DDB% Dep. Exp. End. BV Year 1 300,000 50.0% 150,000 150,000 Year 2 150,000 50.0% 75,000 75,000…
Units-of-activity Depreciation A truck acquired at a cost of $640,000 has an estimated residual value of $35,200, has an estimated useful life of 64,000 miles, and was driven 5,100 miles during the year. Determine the following. If required, round your answer for the depreciation rate to two decimal places. (a) The depreciable cost (b) The depreciation rate per mile (c) The units-of-activity depreciation for the year
Computing Depreciation Expense. Equipment costing $440,000, with an expected scrap value of $40,000 and an estimated useful life of 5 years, was purchased on January 1, 20 Calculate the depreciation expense for years 2012 to 2016 using: (a) the straight-line method and (b) the double-declining-balance method. Round to the nearest whole number. 2012 2013 2014 2015 2016 Straight-line depreciation Double declining balance (0) without straight-line switch-over s (b) with straight-line switch-over 80,000 v$ 80,000 vS 80,000 vs 80,000 v S 80,000 176,000 vs 176,000 vs 105,600 S 63,360 vs 38,016 $ 17,024 105,600 vs 80,000 x $ 80,000 x s 80,000 x Which method is typically preferred for: A) income tax purposes? Double-dedining balance o thi financial reporting purposes? Straight-line method
Measuring asset cost, units-of-production depreciation, and asset trade Wimot Trucking Corporation uses the units-of-production depreciation method because units-of-production best measures wear and tear on the trucks. Consider these facts about one Mack truck in the company’s fleet. When acquired in 2015, the rig cost $360,000 and was expected to remain in service for 10 years or 1,000,000 miles. The estimated residual value was $90,000. The truck was driven 80,000 miles in 2015,120,000 miles in 2016, and 160,000 miles in 2017. After 44,000 miles, on March 15, 2018, the company traded in the Mack truck for a less expensive Freightliner. Wimot also paid cash of $20,000. The fair market value of the Mack truck was equal to its net book value on the date of the trade. Requirements Record the journal entry for depreciation expense in 2018. Determine Wimot’s cost of the new truck. Record the journal entry for the exchange of assets on March 15, 2018. Assume the exchange had commercial…
Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $326,200. The equipment was expected to have a useful life of four years, or 6,800 operating hours, and a residual value of $27,000. The equipment was used for 2,380 hours during Year 1, 1,428 hours in Year 2, 1,904 hours in Year 3, and 1,088 hours in Year 4. Required: 1. Determine the amount of depreciation expense for the three years ending December 31 by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method. Round the answer for each year to the nearest whole dollar. Depreciation Expense Year Straight-Line Method Units-of-Activity Method Double-Declining-Balance Method Year 1 Year 2 Year 3 Year 4 Total
Units-of-activity Depreciation A truck acquired at a cost of $215,000 has an estimated residual value of $13,400, has an estimated useful life of 48,000 miles, and was driven 4,800 miles during the year. Determine the following. If required, round your answer for the depreciation rate to two decimal places. (a) The depreciable cost (b) The depreciation rate per mile (c) The units-of-activity depreciation for the year

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