Excel Applications for Accounting Principles
4th Edition
ISBN: 9781111581565
Author: Gaylord N. Smith
Publisher: Cengage Learning
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Textbook Question
Chapter 9, Problem 4R
To test your formulas, assume the machine purchased had an estimated useful life of three years (20,000, 30,000, and 50,000 hours, respectively). Enter the new information in the Data Section of the worksheet. Does your
There are three common errors made by students completing this worksheet. Letʼs clear up two of them. One, an asset that has a three-year life should have no depreciation claimed in Year 4. This can be corrected using an =IF statement in Year 4. For example, the correct formula in cell C32 is =IF(B32>D9,0,(D7–D8)/D9) or =IF(B32>D9, 0, SLN(D7, D8, D9)). You may wish to edit what you have already entered rather than retype it.
Two, as mentioned in requirement 2, the double-declining-balance calculation needs to be modified in the last year of the assetʼs life. Assuming you have already modified the formula for Year 4 (per instructions in step 2), alter the formula for Year 3 also.
If you corrected any formulas, test their correctness by trying different estimated useful lives (between 3 and 8) in cell E9. Then reset the Data Section to the original values, save the revised file as DEPREC2, and reprint the worksheet to show the correct formulas.
The third common error doesnʼt need to be corrected in this problem. The general form of the double-declining-balance formula needs to be modified to check the net book value of the asset each year to make sure it does not go below salvage value. =DDB does this automatically, but if you are writing your own formulas, this gets very complicated and is beyond the scope of the problem.
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Answer the following questions related to depreciation expense calculation. Be sure
to read each question carefully.
NOTE: (Round Each Answer to the Nearest dollar, Do NOT use any Commas, Dollar
Signs or Periods. - Example 6000).
1. A machine with a useful life of 12 years and residual value of $10,000 was
purchased for $120,000 on January 1. What is the annual depreciation expense
using the straight line method?
2. A truck with a useful life of 7 years and a residual value of $0 was purchased for
$49,000 on January 1. What is depreciation expense in year 5 under the straight
line method?
3. A machine with a useful life of 5 years and residual value of $2,000 was
purchased for $30,000 on January 1. What is the depreciation expense in year 2
using the double declining balance method?
4. A Semi-Truck with a useful life of 7 years and residual value of $50,000 was
purchased for $225,000 on January 1. What is the depreciation expense for year
2 using the double declining balance? (NOTE:…
Warren Enterprises purchased a van for $21,510. The van has a salvage value of $3,800, and an estimated useful life of eight years. Warren plans to use the straight line method of depreciation. The accumulated depreciation at the end of year 3 would be $___
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Chapter 9 Solutions
Excel Applications for Accounting Principles
Ch. 9 - Dunedin Drilling Company recently acquired a new...Ch. 9 - Open the file DEPREC from the website for this...Ch. 9 - In the space below, prepare the journal entry to...Ch. 9 - To test your formulas, assume the machine...Ch. 9 - A truck was recently purchased for 75,000 with a...Ch. 9 - Dunedin Drilling Company recently acquired a new...
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- Assume that Brown's Salvage Company paid $30,000 for equipment with a 10-year life and zero expected residual value. After using the equipment for four years, the company determines that the asset will remain useful for only three more years. Read the requirements. Requirement 1. Record depreciation expense on the equipment for year 5 by the straight-line method. First, select the formula to calculate the company's revised depreciation expense on the equipment for year 5. Then enter the amounts and calculate the depreciation for year 5. (Enter "0" for items with a zero value.) Date Record the depreciation on the equipment for year 5. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Accounts and Explanation Requirement 2. What is accumulated depreciation at the end of year 5? The accumulated depreciation at the end of year 5 is $ = Debit Revised depreciation Creditarrow_forwardA laboratory centrifuge costs $79,000 and has a $5530 salvage value with an 8-year recovery period. Use the double declining balance method with switch over to straight line to tabulate the depreciation schedule at the end of each year. Please use excel if not then that is finearrow_forwardA machine with a cost of $750,000 has an estimated salvage value of $100,000) and an estimated useful life of 5 years or 30,000 hours. It is to be depreciated using the units-of-activity method of depreciation. The machine was used for 7,000 hours in the first year and 9,000 hours in the second year. Calculate the depreciation expense for the second year using the units of activity method. (Please round answer to the nearest dollar, i.e. 3,078.666 would be entered as 3,079)arrow_forward
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