Depreciation Methods, Partial-Year Depreciation, Repeat the requirements in E11-17 assuming that Ace acquired the asset on July 14 of the current year. Use partial-year depreciation assuming that the manufacturing equipment was acquired at the beginning of the month to simplify the computation. E11-17. Depreciation Methods. Ace Manufacturing, Inc. purchased a new piece of manufacturing equipment at a total acquisition cost of $3,000,000 on January 4 of the current year. The firm estimates that the equipment has a useful life of 10 years or 13,250,000 units of output and a residual value of $350,000 at the end of its useful life. The following schedule indicates the actual number of units output with the machine per year: Year Units of Output Year Units of Output 1 1,600,000 6 1,300,000 2 1,600,000 7 1,200,000 3 1,500,000 8 1,200,000 4 1,500,000 9 1,100,000 5 1,300,000 10 1,100,000 Required Prepare the depreciation schedules for the manufacturing equipment assuming that Ace used the following methods (each case is independent): a. Straight-line method. b. Units-of-output method. c. Double-declining balance method (Reduce the depreciation expense in the last year to the necessary amount to arrive at an ending book value equal to the scrap value.) d. Ace sells the manufacturing equipment at the end of Year 5 for $1,465,000. What is the gain or loss on sale under each of the depreciation methods in parts (a)–(c)?
Depreciation Methods, Partial-Year Depreciation, Repeat the requirements in E11-17 assuming that Ace acquired the asset on July 14 of the current year. Use partial-year depreciation assuming that the manufacturing equipment was acquired at the beginning of the month to simplify the computation. E11-17. Depreciation Methods. Ace Manufacturing, Inc. purchased a new piece of manufacturing equipment at a total acquisition cost of $3,000,000 on January 4 of the current year. The firm estimates that the equipment has a useful life of 10 years or 13,250,000 units of output and a residual value of $350,000 at the end of its useful life. The following schedule indicates the actual number of units output with the machine per year: Year Units of Output Year Units of Output 1 1,600,000 6 1,300,000 2 1,600,000 7 1,200,000 3 1,500,000 8 1,200,000 4 1,500,000 9 1,100,000 5 1,300,000 10 1,100,000 Required Prepare the depreciation schedules for the manufacturing equipment assuming that Ace used the following methods (each case is independent): a. Straight-line method. b. Units-of-output method. c. Double-declining balance method (Reduce the depreciation expense in the last year to the necessary amount to arrive at an ending book value equal to the scrap value.) d. Ace sells the manufacturing equipment at the end of Year 5 for $1,465,000. What is the gain or loss on sale under each of the depreciation methods in parts (a)–(c)?
Solution Summary: The author explains how to calculate depreciation with straight line method. Acquisition cost of new machinery is 3,000,000. Useful life is 10years or 13,250,000 units.
Depreciation Methods, Partial-Year Depreciation, Repeat the requirements in E11-17 assuming that Ace acquired the asset on July 14 of the current year. Use partial-year depreciation assuming that the manufacturing equipment was acquired at the beginning of the month to simplify the computation.
E11-17. Depreciation Methods. Ace Manufacturing, Inc. purchased a new piece of manufacturing equipment at a total acquisition cost of $3,000,000 on January 4 of the current year. The firm estimates that the equipment has a useful life of 10 years or 13,250,000 units of output and a residual value of $350,000 at the end of its useful life. The following schedule indicates the actual number of units output with the machine per year:
Year
Units of Output
Year
Units of Output
1
1,600,000
6
1,300,000
2
1,600,000
7
1,200,000
3
1,500,000
8
1,200,000
4
1,500,000
9
1,100,000
5
1,300,000
10
1,100,000
Required
Prepare the depreciation schedules for the manufacturing equipment assuming that Ace used the following methods (each case is independent):
a. Straight-line method.
b. Units-of-output method.
c. Double-declining balance method (Reduce the depreciation expense in the last year to the necessary amount to arrive at an ending book value equal to the scrap value.)
d. Ace sells the manufacturing equipment at the end of Year 5 for $1,465,000. What is the gain or loss on sale under each of the depreciation methods in parts (a)–(c)?
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