The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation . Given: Price of machine: $85,000 Credit terms: 2/10, n/30 Freight-in: $ 800 Preparation and installation costs: $ 3,800 Cost of labor: $10,500 (a) To compute: Depreciation expense using the following methods (Round to the nearest dollar) (1) Straight-line method for 2017. (2) Sum-of-the-years’-digits method for 2018. (3) Double-declining-balance method for 2017.

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Answer 1

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Chapter 11, Problem 1P

To determine

Introduction: The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation.

Given:

Price of machine: $85,000

Credit terms: 2/10, n/30

Freight-in: $ 800

Preparation and installation costs: $ 3,800

Cost of labor: $10,500

(a)

To compute: Depreciation expense using the following methods (Round to the nearest dollar)

(1) Straight-line method for 2017.

(2) Sum-of-the-years’-digits method for 2018.

(3) Double-declining-balance method for 2017.

To determine

(b)

To recommend: To recommend a method of depreciation that will lead to less allocation of the company’s depreciation expense to the initial years and more expenses to the later years of assets’ lives.

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Answer 2

Question

Chapter 11, Problem 1P

To determine

Introduction: The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation.

Given:

Price of machine: $85,000

Credit terms: 2/10, n/30

Freight-in: $ 800

Preparation and installation costs: $ 3,800

Cost of labor: $10,500

(a)

To compute: Depreciation expense using the following methods (Round to the nearest dollar)

(1) Straight-line method for 2017.

(2) Sum-of-the-years’-digits method for 2018.

(3) Double-declining-balance method for 2017.

To determine

(b)

To recommend: To recommend a method of depreciation that will lead to less allocation of the company’s depreciation expense to the initial years and more expenses to the later years of assets’ lives.

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Answer 3

Question

Chapter 11, Problem 1P

To determine

Introduction: The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation.

Given:

Price of machine: $85,000

Credit terms: 2/10, n/30

Freight-in: $ 800

Preparation and installation costs: $ 3,800

Cost of labor: $10,500

(a)

To compute: Depreciation expense using the following methods (Round to the nearest dollar)

(1) Straight-line method for 2017.

(2) Sum-of-the-years’-digits method for 2018.

(3) Double-declining-balance method for 2017.

To determine

(b)

To recommend: To recommend a method of depreciation that will lead to less allocation of the company’s depreciation expense to the initial years and more expenses to the later years of assets’ lives.

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Answer 4

Question

Chapter 11, Problem 1P

To determine

Introduction: The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation.

Given:

Price of machine: $85,000

Credit terms: 2/10, n/30

Freight-in: $ 800

Preparation and installation costs: $ 3,800

Cost of labor: $10,500

(a)

To compute: Depreciation expense using the following methods (Round to the nearest dollar)

(1) Straight-line method for 2017.

(2) Sum-of-the-years’-digits method for 2018.

(3) Double-declining-balance method for 2017.

To determine

(b)

To recommend: To recommend a method of depreciation that will lead to less allocation of the company’s depreciation expense to the initial years and more expenses to the later years of assets’ lives.

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Answer 5

Chapter 11, Problem 1P

To determine

Introduction: The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation.

Given:

Price of machine: $85,000

Credit terms: 2/10, n/30

Freight-in: $ 800

Preparation and installation costs: $ 3,800

Cost of labor: $10,500

(a)

To compute: Depreciation expense using the following methods (Round to the nearest dollar)

(1) Straight-line method for 2017.

(2) Sum-of-the-years’-digits method for 2018.

(3) Double-declining-balance method for 2017.

To determine

(b)

To recommend: To recommend a method of depreciation that will lead to less allocation of the company’s depreciation expense to the initial years and more expenses to the later years of assets’ lives.

Answer 6

Chapter 11, Problem 1P

To determine

Introduction: The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation.

Given:

Price of machine: $85,000

Credit terms: 2/10, n/30

Freight-in: $ 800

Preparation and installation costs: $ 3,800

Cost of labor: $10,500

(a)

To compute: Depreciation expense using the following methods (Round to the nearest dollar)

(1) Straight-line method for 2017.

(2) Sum-of-the-years’-digits method for 2018.

(3) Double-declining-balance method for 2017.

Answer 7

Chapter 11, Problem 1P

To determine

Introduction: The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation.

Given:

Price of machine: $85,000

Credit terms: 2/10, n/30

Freight-in: $ 800

Preparation and installation costs: $ 3,800

Cost of labor: $10,500

(a)

To compute: Depreciation expense using the following methods (Round to the nearest dollar)

(1) Straight-line method for 2017.

(2) Sum-of-the-years’-digits method for 2018.

(3) Double-declining-balance method for 2017.

Answer 8

To determine

(b)

To recommend: To recommend a method of depreciation that will lead to less allocation of the company’s depreciation expense to the initial years and more expenses to the later years of assets’ lives.

Answer 9

To determine

(b)

To recommend: To recommend a method of depreciation that will lead to less allocation of the company’s depreciation expense to the initial years and more expenses to the later years of assets’ lives.

Answer 10

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Answer 11

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Answer 12

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Answer 13

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(b)

To recommend: To recommend a method of depreciation that will lead to less allocation of the company’s depreciation expense to the initial years and more expenses to the later years of assets’ lives.

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(b) To recommend: To recommend a method of depreciation that will lead to less allocation of the company’s depreciation expense to the initial years and more expenses to the later years of assets’ lives.

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(b)

To recommend: To recommend a method of depreciation that will lead to less allocation of the company’s depreciation expense to the initial years and more expenses to the later years of assets’ lives.