Question

In: Accounting

1. On January 1, Year 1, Milton Manufacturing Company purchased equipment with a list price of...

On January 1, Year 1, Milton Manufacturing Company purchased equipment with a list price of $27,000. A total of $2000 was paid for installation and testing. During the first year, Milton paid $3000 for insurance on the equipment and another $600 for routine maintenance and repairs. Milton uses the units-of-production method of depreciation. Useful life is estimated at 100,000 units, and estimated salvage value is $4000. During Year 1, the equipment produced 14,000 units. What is the amount of depreciation for Year 1?

Group of answer choices

$3920

$4480

$4004

$3500

On January 1, Year 1, Missouri Co. purchased a truck that cost $44,000. The truck had an expected useful life of 10 years and a $4000 salvage value. Missouri uses the double declining-balance method. What is the amount of depreciation expense recognized in Year 2?

Group of answer choices

$6400

$4400

$8800

$7040

On January 1, Year 1, Friedman Company purchased a truck that cost $53,000. The truck had an expected useful life of 8 years and an $9000 salvage value. Friedman uses the double-declining-balance method. What is the book value of the truck at the end of Year 1? (Do not round intermediate calculations.)

Group of answer choices

$42,000

$33,000

$30,750

$39,750

On January 1, Year 1, Friedman Company purchased a truck that cost $44,000. The truck had an expected useful life of 100,000 miles over 8 years and an $8000 salvage value. During Year 2, Friedman drove the truck 22,000 miles. Friedman uses the units-of-production method. What is depreciation expense in Year 2? (Do not round intermediate calculations.):

Group of answer choices

$5500

$9680

$7920

$4500

Solutions

Expert Solution

Part 1)4th Option)$3,500

Explanation:

Depreciation(Units of production)=(Original Cost-Salvage)*Units produced/Total units to be produced during asset life

Original Cost=27,000+2000=29000

Thus, Depreciation=(29000-4000)*14000/100000=25000*14000/100000=$3,500

Part 2)4th Option)$7,040

Explanation:

Rate of Depreciation(Under double declining method)=2*100/Useful Life=2*100/10=20%

Depreciation=Written Down Value*Rate

WDV after 1st year=44,000-(20%*44000)=35,200

Depreciation for 2nd year=35,200*20%=$7,040

Part 3)4th Option)$39,750

Explanation:

Rate of Depreciation(Under double declining method)=2*100/Useful Life=2*100/8=25%

WDV after 1st year=53,000-(25%*53000)=53000-13250=$39,750

Part 4)3rd Option)$7,920

Explanation:

Depreciation(Units of production)=(Original Cost-Salvage)*Units Drove/Total units to be driven during asset life

Thus, Depreciation=(44000-8000)*22000/100000=36000*22000/100000=$7,920

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ekkarill92 answered 1 year ago

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