**Depreciation Exercise Instructions:****Assumptions:**- Purchase at time 0 of a piece of widget processing equipment for an assumed cost of $18,300.- The equipment is assumed to have a 7-year economic life.- The assumed salvage value for the widget equipment at the end of its economic life is $800.- The equipment is expected to produce 35,000 widgets over its economic life.- Actual annual production of widgets is 3,450 in year 1, 5,200 in year 2, 5,400 in year 3, 5,350 each in years 4-6 and 4,900 in year 7.- Assume for the declining balance method that you will apply a double declining balance approach.Use an Excel spreadsheet to create a table similar to the one shown below. On your Excel spreadsheet, using the assumptions listed above, calculate the annual depreciation expense for the widget processing equipment using each of the four methods and fill in the table in Excel.After you have completed the calculations, determine which method you would choose to use for tax purposes, if you were in the company’s financial management team, and explain why in a footnote to the table. Then add a second footnote with which method you would choose for financial reporting purposes and why.Finally, submit your completed Excel spreadsheet online via Canvas.---**Depreciation Table Layout:**| | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Total Depreciation ||--------------------------|--------|--------|--------|--------|--------|--------|--------|--------------------|| **Straight Line** | | | | | | | | || **Units of Production** | | | | | | | | || **Sum-of-Years’-Digits** | | | | | | | | || **Double Declining Balance** | | | | | | | | |(Note: The table is empty as it is meant to be filled in with calculated data from the exercise.)

Name: **Depreciation Exercise Instructions:****Assumptions:**- Purchase at
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: **Depreciation Exercise Instructions:****Assumptions:**- Purchase at time 0 of a piece of widget processing equipment for an assumed cost of $18,300.- The equipment is assumed to have a 7-year economic life.- The assumed salvage value for the widget

Depreciation is an accounting method for allocating the cost of a physical or cost of a tangible over its usable life or expected life. Depreciation is a term that describes how much of an asset's worth has been consumed. Straight Line Depriciation = ($18300-$800) / 7 Years = $17500 each year Units od Production = ($18300-$800) / 35000 units = $0.50 per units Sum of Years Digit = ($18300-$800) / (7+6+5+4+3+2+1) = $625 per digit Double Declining Balance = 1/7 x 2 = 28.57%

Business

Accounting

Purchase at time 0 of a piece of widget processing equipment for The equipment is assumed to have a 7-year economic life. The assumed salvage value for the widget equipment at the end The equipment is expected to produce 35,000 widgets over its ec Actual annual production of widgets is 3,450 in year 1, 5,200 in y each in years 4-6 and 4,900 in year 7. Assume for the declining balance method that you will apply a do approach. Use an Excel spreadsheet to create a table similar to the one sho spreadsheet, using the assumptions listed above, calculate the a the wid aet pro cessing eguin ment using each of the four methods

Purchase at time 0 of a piece of widget processing equipment for The equipment is assumed to have a 7-year economic life. The assumed salvage value for the widget equipment at the end The equipment is expected to produce 35,000 widgets over its ec Actual annual production of widgets is 3,450 in year 1, 5,200 in y each in years 4-6 and 4,900 in year 7. Assume for the declining balance method that you will apply a do approach. Use an Excel spreadsheet to create a table similar to the one sho spreadsheet, using the assumptions listed above, calculate the a the wid aet pro cessing eguin ment using each of the four methods

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

Calculate the present worth of all costs for a newly acquired machine with an initial cost of $24,000, no trade-in value, a life of 11 years, and an annual operating cost of $14,000 for the first 6 years, increasing by 10% per year thereafter. Use an interest rate of 10% per year. The present worth of all costs for a newly acquired machine is determined to be $
The cost of an equipment is P650,000 and the cost of installation is P45,000. If the salvage value is 12% of the cost of equipment at the end of 10 years, determine the book value at the end of the fourth year. a. Use straight-line method (SLM) b. Use sinking fund method (SFM) at 3.5% interest. Please answer completely will give rating surely Please answer very soon
An engineer with Haliburton calculated the AW values shown for retaining a presently owned machine additional years. A challenger has an economic service life of 7 years with AW = $-86,000 per year. Assuming all future costsremain as estimated for the analysis, (a) when should the company replace the defender and with what machine, and (b) when should the companypurchase the challenger? The MARR is 12% per year. Assume used machines like the one presently owned will always be available.
A new project has an initial cost of $250,000. The equipment will be depreciated on a straight-line basis to a zero book value over the five-year life of the project. The projected net income each year is $13,250, $18,000, $20,240, $15,150, and $11,900, respectively. What is the average accounting return? Multiple Choice 11.52% 8.95% 13.46% 12.57% 5.33%
A delivery car had a first cost of $40,000, an annual operating cost of $18,000, and an estimated $3500 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 3 years and must be sold now as a used vehicle. At an interest rate of 11% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if it had been kept for its full life cycle? The market value of the used vehicle is determined to be $
An engineering analysis by net present worth (NPW) is to be made for the purchase of two devices, A and B. If an 8% interest rate is used, recommend the device to be purchased.
A machine costs P 7,350, has a life of 8 years and has a salvage value of P 350 at the end of 8 years. In how many years from now when you can sell the machine at P 2,294.44 if depreciation used is SYD Method?
3. You are confronted with a decision whether to replace an old transit mixer or to purchase a new one of the same model and capacity. The following information is given, namely: Replacement (Brand New) 3,200,000 65,000 300,000 15 year Retention (Refurbished) Initial Cost, P 550,000 Operating Cost, P/year Salvage value Life, year 210,000 30,000 5 Assuming interest rate is 6% per year, would you recommend to retain (with refurbishment) or to totally replace the equipment now? What are the implications of your decision? Explain your answer.
A piece of equipment has a first cost of $75000, a maximum useful life of 4 years, and a market (salvage) value described by the relation Sk = 60000 – 10500k, where k is the number of years since it was purchased. The AOC series is estimated using AOC= 30000 + 4500k. The interest rate is 9% per year. When should the company replace this asset?
Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. Gross investment Less: Accumulated depreciation Net investment AAR Year 0 Year 1 Year 2 Year 3 Year 4 $ 58,000 $58,000 $ 58,000 $ 58,000 $58,000 0 14,500 29,000 43,500 58,000 +% $ 58,000 $43,500 $ 29,000 $14,500 $ The machine generates, on average, $6,000 per year in additional net income. What is the average accounting return for this machine? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) 0
A delivery car had a first cost of $36,000, an annual operating cost of $16,000, and an estimated $3500 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 3 years and must be sold now as a used vehicle. At an interest rate of 14% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if it had been kept for its full life cycle? The market value of the used vehicle is determined to be $ .
I need the answer quickly