Summit Industries purchased a delivery van on January 1, 2022. Summit paid $24,000 for the van. The van is expected to have a $4,000 residual value and a 5-year life. Summit has a December 31 fiscal year-end. Using the straight-line method, what is the 2023 depreciation expense?
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- Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation is recorded?On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.Hathaway Company purchased a copying machine for 8,700 on October 1, 2019. The machines residual value was 500 and its expected service life was 5 years. Hathaway computes depreciation expense to the nearest whole month. Required: 1. Compute depredation expense (rounded to the nearest dollar) for 2019 and 2020 using the: a. straight-line method b. sum-of-the-years-digits method c. double-declining-balance method 2. Next Level Which method produces the highest book value at the end of 2020? 3. Next Level Which method produces the highest charge to income in 2020? 4. Next Level Over the life of the asset, which method produces the greatest amount of depreciation expense?
- On January 1, 2025, a machine was purchased for $1,040,000 by Metlock Co. The machine is expected to have an 8-year life with no salvage value. It is to be depreciated on a straight-line basis. The machine was leased to Ivanhoe Inc. for 3 years on January 1, 2025, with annual rent payments of $260,000 due at the beginning of each year, starting January 1, 2025. The machine is expected to have a residual value at the end of the lease term of $562,500, though this amount is unguaranteed. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer is correct. How much should Metlock report as income before income tax on this lease for 2025? Income before income tax $ (b) eTextbook and Media List of Accounts Date 130,000 Record the journal entries Ivanhoe would record for 2025 on this lease, assuming its incremental borrowing rate is 5% and the rate implicit in the lease is unknown. (List all debit entries…Sandhill Ltd. purchased a delivery truck on January 1, 2021, at a cost of $80,640. The truck is expected to have a residual value of $7,380 at the end of its 4-year useful life. Sandhill has a December 31 year end. Use the diminishing-balance method and assume the depreciation rate is equal to double the straight-line rate Calculate the depreciation for each year of the truck’s life. (Round answers to 0 decimal places, e.g. 5,275.) Depreciation expense 2021 $enter a dollar amount 2022 $enter a dollar amount 2023 $enter a dollar amount 2024 $enter a dollar amountThe Pike Company purchased a delivery truck for$71,000and estimated that the truck would have a useful life of 6 years at which time it could be sold for$6,200. If the truck was purchased on March 1, 2021, how much depreciation expense in total would be recorded in 2021? As needed, round your final answer to the nearest whole dollar.
- Norman Delivery Company purchased a new delivery truck for $69,000 on April 1, 2019. The truck is expected to have a service life of 10 years or 90,000 miles and a residual value of $3,000. The truck was driven 10,000 miles in 2019 and 14,000 miles in 2020. Norman computes depreciation expense to the nearest whole month.Crane Ltd. purchased a delivery truck on January 1, 2021, at a cost of $83,920. The truck is expected to have a residual value of $8,070 at the end of its 4-year useful life. Crane has a December 31 year end. Use the diminishing-balance method and assume the depreciation rate is equal to double the straight-line rate. (a) Calculate the depreciation for each year of the truck's life. (Round answers to O decimal places, e.g. 5,275.) Depreciation expense 2021 $ 2022 2$ 2023 $ 2024 $ eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer (b) The parts of this question must be completed in order. This part will be available when you complete the part above.Lux Inc. recently purchased some production equipment that they would take possession as of February 1, 2021. The total purchase price for the equipment is $175,000 and they expect the residual value to be $25,000. The equipment is expected to have an estimated useful life of 5 years. Lux Inc. has a fiscal year end of December 31st. Required - a. What is the production equipment's depreciation expense for the year ending December 3, 2021, if they apply: i. straight-line method? ii) declining balance method for 2021 and 2022 assuming a 20% rate? b. On January 1, 2023, the company decided to make improvements to the production equipment and believe the total its estimated life will now be a total of 8 years and the residual value be $15,000. What is the depreciation expense for the year ending December 31, 2023, assuming the company uses the straight-line method? Assume that the 2021 and 2022 depreciation expenses were recorded correctly. c. On January 1, 2025 Lux Inc. sold the…
- On March 20, 2021, Barnes Company purchased a machine for P2,400,000 for the purpose of leasing it to others. The machine is expected to have a 10 year life and no residual value. It will be depreciated on the straight line base computed to the nearest month. The machine was leased to Rally Company on April 1, 2021 for 4 years at a monthly rental of P36,000. Barnes Company paid P120,000 initial direct costs associated with negotiating the lease in March 2021. 1. The machinery would be reported in the financial statements on December 31, 2021 at:Storm Delivery Company purchased a new delivery truck for $69,000 on April 1, 2019. The truck is expected to have a service life of 10 years or 150,000 miles and a residual value of $3,000. The truck was driven 8,000 miles in 2019 and 20,000 miles in 2020. Storm computes depreciation expense to the nearest whole month. For each method, what is the book value of the machine at the end of 2019? At the end of 2020? (Round your answers to the nearest dollar.) Straight-line method 2019 $ fill in the blank 2020 $ fill in the blank Sum-of-the-years'-digits method 2019 $ fill in the blank 2020 $ fill in the blankOn January 2, 2020, ABC Co. purchased a machine on credit terms 2/10, n/30. The invoice price was P40,000. Additional costs incurred in connection with the machine are as follows: Transportation-in: P1,200 Installation cost: P700 Testing costs prior to regular operation: P550 If the invoice is paid February 1, the acquisition cost of the machine must be a. P41,650 b. P41,100 c. P40,400 d. P39,200 e. answer not given
