On January 2, 2017, Chair King Co. purchased a new van for $45,000. The van had...

On January 2, 2017, Chair King Co. purchased a new van for $45,000. The van had an expected useful life of six years, and an expected salvage value of $15,000. The company expected that in those six years, the van would be driven for 150,000 miles based on the following schedule:

2017 – 13,000 miles

2018 – 21,000 miles

2019 – 28,000 miles

2020 – 29,000 miles

2021 – 37,000 miles

2022 – 22,000 miles

Required:

Assuming a December 31 year-end, prepare a depreciation schedule for the life of the van using:

Straight-line depreciation

Units-of-production depreciation

Double-declining-balance depreciation

Expert Solution

Straight Line Depreciation			Units of Production Depreciation

Cost of the Van		$45,000	Depreciation = (No. of units Produced / Total Life in number of units)(Cost- Salvage Value)
Useful life of the van		6 years	2017	13,000.00
Salvage Value		$15,000	2018	21,000.00
			2019	28,000.00
			2020	29,000.00
Depreciation Schedule under Straight Line Method			2021	37,000.00
			2022	22,000.00
	Straight Line Method	Double Declining Balance Method	Total	150,000.00
Period	SLN	DDB	Period	Depreciation
1	$5,000.00	$15,000.00	1	2600
2	$5,000.00	$10,000.00	2	4200
3	$5,000.00	$5,000.00	3	5600
4	$5,000.00	$0.00	4	5800
5	$5,000.00	$0.00	5	7400
6	$5,000.00	$0.00	6	4400

ekkarill92 answered 2 years ago

Bebtley Co. purchased equipment on January 1, 2017, at a cost of $45,000. Depreciation for 2017...

Bebtley Co. purchased equipment on January 1, 2017, at a cost of $45,000. Depreciation for 2017 and 2018 was based on an estimated eight-year life and $3,000 estimated residual value. The company uses the straight-line method of depreciation and records any partial-year depreciation based on the number of months the asset is in service. In 2019, Bentley Co. revised its depreciation estimate and now believes the equipment will have a total service life of six years & a residual value...

On January 2, 2015, Mullins Company purchased a delivery truck for $45,000 cash. The truck had...

On January 2, 2015, Mullins Company purchased a delivery truck for $45,000 cash. The truck had an estimated useful life of seven years and an estimated residual value of $3,000. Straight-line depreciation was used. On September 1, 2019, the truck and $40,000 cash were exchanged for a new delivery truck that had a fair value of $70,000. Assuming the transactions have commercial substance, circle the answer that is correct when recording the journal entry of the above asset exchange transaction....

On January 8, 2017, Whitewater Riders purchased a van to transport rafters back to the point...

On January 8, 2017, Whitewater Riders purchased a van to transport rafters back to the point of departure after completing the on-the-water portion of the rafting adventures they operate. The cost of the van is $44,000 and Whitewater Rider expects to use the van for four years or 60,000 miles. The estimated selling price after four years is $2,000. The van was driven 12,000 miles in 2017, 18,000 miles in 2018, 21,000 miles in 2019, and 10,000 miles in 2020....

Brown Inc. acquired a delivery van on October 1, 2017 at a cost of $45,000. The...

Brown Inc. acquired a delivery van on October 1, 2017 at a cost of $45,000. The useful life of the van was 12 years with a residual value of $3,000. Assume that the company used straight-line method with fractional years rounded to the nearest whole month. The delivery van was traded-in with a new one as of end of the year of 2018 (December 31, 2018). The list price of the new delivery van was $56,000. The Brown Inc. accepted...

On January 1, 2018, McCallen Motors purchased a new company van for $42,000. They estimate that...

On January 1, 2018, McCallen Motors purchased a new company van for $42,000. They estimate that the garage will last 4 years, and at the end of the 4 years it will have a salvage value of $6,000. McCallen uses straight-line depreciation. 8. What is the depreciation expense each year for the van? a. $42,000 b. $9,000 c. $36,000 d. $10,500 9. What is the book value of the van at the end of 2019? a. $ 36,000 b. $24,000...

Question 5: (12 Marks) Forty-Niner Co purchased a computer for $325,000 on January 2, 2017. The...

Question 5: Forty-Niner Co purchased a computer for $325,000 on January 2, 2017. The company expects the computer to last for 8 years or 15,000 hours of operation, with an estimated residual value of $25,000. During 2017 the computer was operated for 2,000 hours, while in 2018 it was operated for 2,600 hours . Required: Calculate the depreciation expense for the computer for 2017 and 2018 using the following depreciation methods: a) Straight-line. b) Declining-balance at twice the straight-line rate....

On January 1, 2017, King Co issued a $8 million, 8%, 10-year convertible bond with annual...

On January 1, 2017, King Co issued a $8 million, 8%, 10-year convertible bond with annual coupon payments. Each $1,000 bond was convertible into 25 shares of King’s common shares. Prince Investments purchased the entire bond issue for $8,250,000 million on January 1, 2017. King estimated that without the conversion feature, the bonds would have sold for $7,508,435 (to yield 10%). On January 1, 2019, Prince converted bonds with a par value of $4 million. At the time of conversion,...

1.) Carrie Heffernan Company purchased a delivery van on January 1, 2016, for $50,000. The van...

1.) Carrie Heffernan Company purchased a delivery van on January 1, 2016, for $50,000. The van was expected to remain in service 4 years (or 100,000 miles) and has a residual value of $5,000. The van traveled 30,000 miles the first year, 25,000 miles the second year, and 22,500 miles in the third and fourth years. Required: 1. Prepare a schedule of depreciation expense per year for the first four years of the asset's life using the (a) straight-line method,...

On January 2, 2010, Sayre Company purchased a machine for $45,000. The machine has a five-year...

On January 2, 2010, Sayre Company purchased a machine for $45,000. The machine has a five-year estimated useful life and a $5,000 estimated residual value. In addition, the company expects to use the machine 250,000 hours. Assuming that the machine was used 40,000 and 45,000 hours during 2010 and 2011, respectively, complete the following chart. Depreciation Expense 1st Year Depreciation Expense 2nd Year Accumulated Depreciation Net Book Value Straight-Line Method Declining Balance Method

Company A purchased a lathe on January 1, 2019, at a cost of $45,000. At the...

Company A purchased a lathe on January 1, 2019, at a cost of $45,000. At the time of purchase, the lathe was expected to have a five-year economic life and a residual value of $3,000. Company A uses straight-line depreciation. At the beginning of 2021, Company A estimated the lathe to have a remaining life of four years with no residual value. For the year ended December 31, 2021, Company A would report depreciation expense of: A. $6750 B. $7050...

Question