Q 7 – Hilal Company purchased a new machine on May 1, 2020, at a cost of $90,000. The company estimated that the machine has a salvage value of $18,000. The machine is expected to be used for 72,000 working hours during its 8-year life. Instructions Compute the depreciation expense under the following methods for the year indicated. (a). Straight-line for 2020. (b). Units-of-activity for 2020, assuming machine usage was 6,750 hours. ( (c). Declining-balance using double the straight-line rate for 2020 and 2021.

Q 7 – Hilal Company purchased a new machine on May 1, 2020, at a cost of $90,000. The company estimated that the machine has a salvage value of $18,000. The machine is expected to be used for 72,000 working hours during its 8-year life. Instructions Compute the depreciation expense under the following methods for the year indicated. (a). Straight-line for 2020. (b). Units-of-activity for 2020, assuming machine usage was 6,750 hours. ( (c). Declining-balance using double the straight-line rate for 2020 and 2021.

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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Problem 1 Truss, Inc. purchased a new machine on January 1, 2021, at a cost of 700.000 The machine's estimated useful life at the time of the purchase was four years, and its residual value was 55.000. Instructions 1. Prepare a complete depreciation schedule, beginning with calendar year 2021, under each of the methods listed below: (a) Straight-line. (b) 200 percent declining-balance Assume that Truss, Inc. sells the machine on December 31, 2021, for 300.000 cash. Compute the resulting gain or loss from this sale under each of the depreciation methods.
Question 2 A company purchased plant and equipment 4 years ago for $100 000. Depreciation is provided using the straight line method over 10 years. The company decided to revalue the plant and equipment at the end of the fourth year. The carrying amount was $60 000 (100 000 – 40 000). The net replacement cost of the plant and equipment was considered to be $75 000 at that date. Required: Calculate, using the 2 methods allowed by IAS16 - a) i) gross replacement cost b) accumulated depreciation on gross replacement cost the carrying amount c) show the journal entries for the calculation
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Orr January 1, 2024, Company ABC purchased a piece of equipment for $50,000. The equipment has an estimated useful life of 5 years and a salvage value of $5,000. Calculate the depreciation expense for the year ended December 31, 2024, using the straight-line depreciation method.
Question 5 Sunland Co. purchased equipment for $587,000 which was estimated to have a useful life of 10 years with a salvage value of $11,000 at the end of that time. Depreciation has been entered for 7 years on a straight-line basis. In 2021, it is determined that the total estimated life should be 15 years with a salvage value of $4,600 at the end of that time. (a) Prepare the entry (if any) to correct the prior years’ depreciation. (b) Prepare the entry to record depreciation for 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
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Exercise 11-3 (Aigo) Depreciation methods; partial periods [LUT1-2] The following information applies to the questions displayed below.] On October 1, 2024, the Allegheny Corporation purchased equipment for $233,000. The estimated service life of the equipment is 10 years and the estimated residual value is $2,000. The equipment is expected to produce 420,000 units during its life. Required: Calculate depreciation for 2024 and 2025 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service. Exercise 11-3 (Algo) Part 2 2. Double-declining-balance. Depreciation Expense = $ 11,650 Formula Beginning Book Value Double-Declining-Balance Method xDouble the Straight-line Rate X Fraction of Year = Amount for 2024 $ 233,000 x 20 % x 3/12 Amount for 2025 X 20 % * 12/12 =
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