Straight-Line Depreciation Method: Office Mart purchases a photocopier for $70,000. The photocopier has a salvage value of $7,000 and has expected life of seven years. Office Mart uses the straight-line depreciation method. • Calculate the annual depreciation expense. What is the year one book value? • What is the year three book value? • What is the year six accumulated depreciation?

Straight-Line Depreciation Method: Office Mart purchases a photocopier for $70,000. The photocopier has a salvage value of $7,000 and has expected life of seven years. Office Mart uses the straight-line depreciation method. • Calculate the annual depreciation expense. What is the year one book value? • What is the year three book value? • What is the year six accumulated depreciation?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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XYZ Company purchased a machine on January 1, 2014. The cost of the machine was $175,000 with a useful life of 10 years and a salvage value of $25,000. Using the straight- line method, the depreciation expense per year will be: O a. $15,000 O b. $17,500 O c. $20,000 O d. $18,500
Apex Fitness Club uses straight-line depreciation for a machine costing $27,450, with an estimated four-year life and a $2,050 salvage value. At the beginning of the third year, Apex determines that the machine has three more years of remaining useful life, after which it will have an estimated $1,600 salvage value. 1. Compute the machine's book value at the end of its second year. 2. Compute the amount of depreciation for each of the final three years given the revised estimates. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the machine's value at the end of its second year. answers to the nearest whole dollar.) Book Value at the End of Year 2: Cost Accumulated depreciation 2 years Book value at point of revision $ 0 lations. Round your final
Suds-n-Dogs just purchased new automated bun-handling equipment for $12,000. The salvage value of the equipment is anticipated to be $1200 at the end of its 5-year life. Use MACRS to determine the depreciation schedule using a three-year property class.
truck costing $20,000 was purchased on January 1, 2004. It was depreciated using the straight-line method with an estimated useful life of 4 years and a salvage value of $2,000. If the truck is sold at the end of 2005 for $6,000, how much gain or loss will be recognized?
3. Montello Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for 120,000 miles. Montello uses the units-of-production depreciation method. Calculate the depreciation expense for years 1 and 2 assuming the truck was driven 23,000 miles in year 1 and 26,000 miles in year 2.
A pharmacy is planning to purchase a second-hand scanning microscope at a cost of BD10,500, and its estimated salvage value is BD500 and a projected useful life of four years. Determine the depreciation for 4th year using DDB method and complete the depreciation schedules with depreciation values and book values.
Earthmoving machinery was purchased for $75,000. The machine has an estimated useful life of 10 years. If its salvage value is estimated as $5,000, a. What is the Book Value (BV) of the asset at the end of the fourth year using the SL method? b. Using Double Declining Balance (DDB) method, which year and why you may be able to switch to the SL method.
Colquhoun International purchases a warehouse for $301,000. The best estimate of the salvage value at the time of purchase was $16,000, and it is expected to be us for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determir that the warehouse will be useful for only another fifteen years. A. Calculate annual depreciation expense for the first four years. $ 171,000 B. Determine the depreciation expense for the final fifteen years of the asset's life. 11,400 X Feedback V Check My Work When revising deprecation schedules, the book value is used as the adjusting base to apply the new changes to when determine the revised yearly depreciation amount. C. Prepare the journal entry for year five. If an amount box does not require an entry, leave it blank. Depreciation Expense 171,000 X Accumulated Depreciation-Warehouse 171,000
4. The annual depreciation of an air conditioning unit is $25 using straight line method. It was bought for $148 with a salvage value of $15. Determine its service life.
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.
Delta Machine Company purchased a computerized assembly machine for $108,000 on January 1 Year 1 Delta Machine Company estimated that the machine would have a life of four years and a $11,000 salvage value: Delta Machine Company uses the straight-line method to compute depreciation expense. At the beginning of Year 3 Delta discovered that the machine was quickly becoming. obsolete and would have little value at the end of its useful life Consequently, Delta Machine Company revised the estimated salvage to only $3,000. It did not change the estimated useful life of the machine Compute the depreciation expense for each of the four years Years Year 12 Year 2 Year 3 Year 4 Depreciation Expense
An automated assembly robot that cost $352,000 has a depreciable life of 5 years with a $85,000 salvage value. The MACRS (Modified Accelerated Cost Recovery System) depreciation rates for years 1, 2, 3, and 6 are 20.00%, 32.00%, 19.20%, and 5.76%, respectively. What is the book value at the end of year 3? Year 5? Year 6? The book value at the end of year 3 is $ . The book value at the end of year 5 is $ . The book value at the end of year 6 is $ .

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