Using 100% bonus depreciation, determine the depreciation schedule for $375,000 worth of equipment that was purchased by a small design firm in 2018. The firm had no other capital expenditures.
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- Peter Boy Co. purchased machinery for P15,000,000 on Jan. 1, 2021. The machine has a useful life of 15 years with a residual value of P1,500,000. The entity also estimates that the machine will be able to produce a total of 1,500,000 units of cars. For 2021, the machine produced a total of 75,000 units of cars. Using the Output Method, how much depreciation should be recognized?Mercury Inc. purchased equipment in 2016 at a cost of $400,000. The equipment was expected to produce 700,000units over the next five years and have a residual value of $50,000. The equipment was sold for $210,000 part waythrough 2018. Actual production in each year was: 2016 = 100,000 units; 2017 = 160,000 units; 2018 = 80,000units. Mercury uses units-of-production depreciation, and all depreciation has been recorded through the disposaldate.Required:1. Prepare the journal entry to record the sale.2. Assuming that the equipment was sold for $245,000, prepare the journal entry to record the sale.In 2013, A MINING Corp. purchased property with natural resources for P 12,400,000 The property was relatively close to a large city and had an expected residual value of P 3,000,000 However, P 1,200,000 will have to be spent to restore the land for use. The following information relates to the use of the property: a) In 2013, A MINING Corp. spent P 800,000 in development costs and P 600,000 in buildings on the property. A MINING Corp. does not anticipate that the buildings will have any utility after the natural resources are depleted. b) In 2014 and 2016, P 600,000 and P 1,600,000, respectively, were spent for additional developments on the mine. c) The tonnage mined and estimated remaining tons for years 2013-2017 are as follows: Year /Tons Extracted remaining/Estimated Tons 2013 2014 1,500,000 2015 1,800,000 2016 1,700,000 2017 900,000 Required: 5,000,000 3,500,000 2,000,000 900,000 1. Prepare necessary journal entries in 2014 up to 2017 2. Determine the following: 2.a Depletion…
- Presented below is information related to equipment owned by Monty Company at December 31, 2017. Cost $9,450,000 Accumulated depreciation to date 1,050,000 Expected future net cash flows 7,350,000 Fair value 5,040,000 Monty intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $21,000. As of December 31, 2017, the equipment has a remaining useful life of 4 years. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 SHOW LIST OF ACCOUNTS LINK TO TEXT…Irwin, Inc. constructed a machine at a total cost of $39 million. Construction was completed at the end of 2017 and the machine was placed in service at the beginning of 2018. The machine was being depreciated over a 10-year life using the straight-line method. The residual value is expected to be $3 million. At the beginning of 2021, Irwin decided to change to the sum-of-the-years’-digits method. Ignoring income taxes, prepare the journal entry relating to the machine for 2021.On January 1, 2003, Superior Landscaping Company paid P17,000 to buy a stump grinder. If Superior uses the grinder to remove 2,500 stumps per year, it would have an estimated useful life of 10 years and a salvage value of P4,500. The amount of depreciation expense for the year 2003, using units-of-production depreciation and assuming that 3,500 stumps were removed, is?
- Irwin, Inc., constructed a machine at a total cost of $35 million. Construction was completed at the end of 2014and the machine was placed in service at the beginning of 2015. The machine was being depreciated over a10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $2 million. At thebeginning of 2018, Irwin decided to change to the straight-line method. Ignoring income taxes, what journalentry(s) should Irwin record relating to the machine for 2018?In January, 2021, Melon Corporation purchased a mineral mine for $3,400,000 with removable ore estimated by geological surveys at 2,000,000 tons. The property has an estimated value of $200,000 after the ore has been extracted. The company incurred $1,000,000 of development costs preparing the mine for production. During 2021, 500,000 tons were removed and 400,000 tons were sold. What is the amount of depletion that Melon should expense for 2021Pineapple Ltd applied for a government grant of $1,000,000 on 5 January 2017 to cover part of the cost of a new machine. The grant was approved on 1 February 2017 and the government released the fund on 1 April 2017. Pineapple purchased the machine for $5,000,000 with cash on 1 June 2017 and the machine was used for production The machine was depreciated over its estimated useful life of 10 years on method and depreciation was calculated monthly. Pineapple Ltd prepared statements at 31 December each year. (a) On which date should Pineapple Ltd recognize the government grant? Explain. (b) Assume Pineapple Ltd recognized the government grant as deferred income. Prepare the extracts of statement of financial position and the statement of profit or loss for the year ended 31 December 2017. Show your workings. (c) The life of a business is divided into specific time periods, usually a year, to measure results of operations for each such time period and to portray financial…
- (Analysis of Subsequent Expenditures) The following transactions occurred during 2017. Assume thatdepreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year.Jan. 30 A building that cost $132,000 in 2000 is torn down to make room for a new building. The wrecking contractor was paid $5,100 and was permitted to keep all materials salvaged.Mar. 10 Machinery that was purchased in 2010 for $16,000 is sold for $2,900 cash, f.o.b. purchaser’s plant. Freight of $300 is paid on the saleof this machinery.Mar. 20 A gear breaks on a machine that cost $9,000 in 2009. The gear is replaced at a cost of $2,000. The replacement does not extend theuseful life of the machine but does make the machine more effi cient.May 18 A special base installed for a machine…Abbott placed into service a flexible manufacturing cell costing $820,000 early this year for production of their analytical testing equipment. Gross income due to the cell is expected to be $780,000 with deductible expenses of $475,000. Depreciation is based on MACRS-GDS, and the cell is in the 7-year property class, calling for a depreciation percentage of 14.29%, or $117,178, in the 1st year. Half of the cell cost is financed at 11% with principal paid back in equal amounts over 5 years. The 1st year's interest is therefore $45,100, while the principal payment is $82,000. a. Determine the taxable income for the 1st year. $ b. Determine the tax paid due to the cell during the 1st year using a 25% marginal tax rate. $ c. Determine the after-tax cash flow for the 1st year. $On January 1, 2014, Barbed Company purchased an equipment for P900,000, with an estimated useful life of 8 years. Straight-line method of depreciation is to be used with no salvage value. On January 1, 2017, the equipment was tested for impairment. The estimated selling price of the equipment is P550,000 and the estimated cost to sell is P30,000. The asset is expected to provide annual net cash inflows of P145,000 during the remaining useful life of the equipment and estimated a residual value of P35,000 at the end of its useful life. The appropriate pre-tax discount rate that reflects current market assessments of the time value of money is 12%. 26) How much is the recoverable value of the equipment on January 1, 2017? A 520,000 C. 550,000 . B. 542,570 D. 562,500 27) How much is the impairment loss to be recognized on January 1, 2017? A. 12,500 C. 19,930 B. 42,500 D. 0 28) How much is the depreciation expense for the year 2017? A. 108,514 C. 103,000 B. 101,514 D. 112,500