Question
In: Finance
QUESTION 1 (7 marks) A machine that caps soda bottles was purchased April 1, 2020 for...
QUESTION 1 A machine that caps soda bottles was purchased April 1, 2020 for $96,000; estimated useful life of 10 years and salvage value of $6,000. It is also estimated that the machine could cap a total of 360,000 bottles over its entire life. Calculate depreciation expense under the following independent assumptions: 1. Straight line depreciation, for the year ended Dec. 31, 2020. 2. Double declining balance depreciation for the year ended Dec. 31, 2020 and 2021. 3. Units of production depreciation for 2020 assuming 34,000 bottles were actually capped between April 1, 2020 and December 31, 2020. Record your answers and calculations below
Solutions
Expert Solution
| Cost of Asset = $96,000 | |||||||||
| Life = 10 years | |||||||||
| Salvage Value = $6,000 | |||||||||
| Machine Purchase date = April 1, 2020 | |||||||||
| 1) Straight Line Depreciation | |||||||||
| Annual Depreciation Expense = (Cost of Asset - Salvage Value ) / Life | |||||||||
| Annual Depreciation Expense = (96000 - 6000 ) / 10 | |||||||||
| Annual Depreciation Expense = $9000 | |||||||||
| Since the asset is purchased on 1st April and depreciation expense is calculated on 31st dec 2020, the depreciation will be charged only for 9month during first year | |||||||||
| Depreciation for year ended 31 Dec 2020 = 9000*9/12 | |||||||||
| Depreciation for year ended 31 Dec 2020 = $6,750 | |||||||||
| 2) Double Declining balance Depreciation | |||||||||
| Depreciation Rate = (100%/Total Life)*2 = (100%/10)*2 | |||||||||
| Depreciation Rate = 20% | |||||||||
| Since the asset is purchased on 1st April and depreciation expense is calculated on 31st dec 2020, the depreciation will be charged only for 9month during first year | |||||||||
| Depreciation for year ended 31 Dec 2020 = Cost * Depreciation rate * 9/12 | |||||||||
| Depreciation for year ended 31 Dec 2020 = 96000 * 20% * 9/12 | |||||||||
| Depreciation for year ended 31 Dec 2020 = $14,400 | |||||||||
| WDV for year ended 31 Dec 2020 = 96000-14400 = $81,600 | |||||||||
| Depreciation for year ended 31 Dec 2021 = WDV * Depreciation rate | |||||||||
| Depreciation for year ended 31 Dec 2021 = 81600*20% | |||||||||
| Depreciation for year ended 31 Dec 2021 = $16320 | |||||||||
| 3) Units of Production Method | |||||||||
| Total Units during life of asset = 360,000 | |||||||||
| Units produced during April to Dec 2020 = 34000 | |||||||||
| Depreciation for year ended 31 Dec 2021 = (Units Produced during year / Total Units ) * Cost of Asset | |||||||||
| Depreciation for year ended 31 Dec 2021 = (34000 / 360000 ) * 96000 | |||||||||
| Depreciation for year ended 31 Dec 2021 = $9066.67 | |||||||||
jeff jeffy answered 1 year agoRelated Solutions
A machine makes twist-off caps for bottles. The machine is adjusted to make caps of diameter...
A machine makes twist-off caps for bottles. The machine is
adjusted to make caps of diameter 1.85. Production records show
that when the machine is so adjusted it will make caps with a mean
diameter of 1.85 cm and with a standard deviation of 0.05 cm.
During production, an inspector checks the diameters of caps to see
if the machine has slipped out of adjustment. A random sample of 64
caps is taken. If the mean diameter for the sample...
Question 1 Week 7 (7 marks) Jaguar Ltd purchased a machine on 1 July 2016 at...
Question 1 Week 7 Jaguar Ltd purchased a machine on 1
July 2016 at the cost of $640,000. The machine is expected to have
a useful life of 5 years (straight-line basis) and no residual
value. For taxation purposes, the ATO allows the company to
depreciate the asset over 4 years. The profit before tax for the
company for the year ending 30 June 2017 is $600,000. To calculate
this profit the company has deducted $60,000 entertainment expense,
and $80,000...
Question 1 (40 marks) The inventory at April 1, 2020, and the costs charged to Work...
Question 1
The inventory at April 1, 2020, and the costs charged to Work in
Process--Department B during April for Worldwide Company are as
follows:
1,200 units, 40% completed
$ 47,800
From Department A, 26,000 units
845,000
Direct labor
312,000
Factory overhead
176,770
During April, all direct materials are transferred from
Department A. In Department B, the units in process at April 1 were
completed, and of the 26,000 units entering the department, all
were completed except 1,000 units which were...
Question 1 (40 marks) The inventory at April 1, 2020, and the costs charged to Work...
Question 1
The inventory at April 1, 2020, and the costs charged to Work in
Process--Department B during April for Worldwide Company are as
follows:
1,200 units, 40% completed
$ 47,800
From Department A, 26,000 units
845,000
Direct labor
312,000
Factory overhead
176,770
During April, all direct materials are transferred from
Department A. In Department B, the units in process at April 1 were
completed, and of the 26,000 units entering the department, all
were completed except 1,000 units which were...
A soda vending machine is supposed to dispense 7 fluid ounces of soda into a cup....
A soda vending machine is supposed to dispense 7 fluid ounces of
soda into a cup. The canteen manager tested the machine by taking a
sample of 20 cups of soda. He measured the 20 cups of soda
individually and found that the measurements had a mean of 8.08 fl.
oz. and a standard deviation of 2.85 fl. oz. Determine if the
machine dispense is different from the required ounces set by the
company.
(a) State the null hypothesis and...
Question 3 - Week 10 (7 marks) On 1 March 2020 Holmes Ltd enters into a...
Question 3 - Week 10 On 1 March 2020 Holmes Ltd enters
into a binding agreement with a New Zealand company, which requires
the New Zealand Company to construct an item of machinery for
Holmes Ltd. The cost of the machinery is NZ$750,000. The machinery
is completed on 1 June 2021 and shipped FOB Auckland on that date.
The debt is unpaid at 30 June 2020, which is also Holmes Ltd’s
reporting date. The exchange rates at the relevant dates...
Question 2 (20 marks) KOL Limited purchased a machine on 1 January 2018 at $500,000. It...
Question 2
KOL Limited purchased a machine on 1 January 2018 at $500,000.
It has an expected useful life of 5 years and an estimated salvage
value of $50,000. It is also expected that the machine can run for
30,000 hours. For the year ended 31 December 2018, KOL has used the
machine for 4,000 hours.
KOL has another equipment with the following data on 31 December
2018.
Required:
e. Discuss when a company should perform an impairment review
for...
Question 2 (20 marks) KOL Limited purchased a machine on 1 January 2018 at $500,000. It...
Question 2
KOL Limited purchased a machine on 1 January 2018 at $500,000.
It has an expected useful life of 5 years and an estimated salvage
value of $50,000. It is also expected that the machine can run for
30,000 hours. For the year ended 31 December 2018, KOL has used the
machine for 4,000 hours.
KOL has another equipment with the following data on 31 December
2018.
Cost $260,000
Carrying amount $200,000
Fair value less costs to sell $180,000...
6. Imagine that a soda bottling machine fills 550 ml bottles with a standard deviation of...
6. Imagine that a soda bottling machine fills 550 ml bottles
with a standard deviation of 7 ml. If we took 100 sample bottles,
estimate how many bottles would meet the quality standard of
selling bottles with at least 548ml
7. From the previous example, estimate the 70th decile of
bottles and how many ml they would have of soda. That is, 70% of
the bottles with more soda.
On January 1, 2020, a machine was purchased for $900,000 by Young Co. The machine is...
On January 1, 2020, a machine was purchased for $900,000 by
Young Co. The machine is expected to have an 8-year life with no
salvage value. It is to be depreciated on a straight-line basis.
The machine was leased to St. Leger Inc. for 3 years on January 1,
2020, with annual rent payments of $150,955 due at the beginning of
each year, starting January 1, 2020. The machine is expected to
have a residual value at the end of...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Describe an action a regulatory agency took against a business in the past 6 months. Post...
- Performance and Breach Under what circumstances should courts not allow fully informed contracting parties to agree...
- Rubash Company recently issued two types of bonds. The first issue consisted of 20-year straight (no...
- 2 kg of iron ingot at 1100oC is mixed with 1 kg of water at -20oC....
- Misusing the percent of sales method) The Caraway Seed Company has grown rapidly over the last...
- 9.77 Methane is burned with 25% excess air in a continuous adiabatic reactor. The methane enters...
- Toledo Custom Manufacturing (TCM), located in Toledo, Ohio, makes metal parts to customer specifications. They have...
ADVERTISEMENT