Question

In: Accounting

Bob's Cars purchased a new car for use in its business on January 1, 2017. It...

Bob's Cars purchased a new car for use in its business on January 1, 2017. It paid $30,000 for the car. Charm expects the car to have a useful life of four years with an estimated residual value of zero. Charm expects to drive the car as follows

Year 2017: 20,000 miles driven

Year 2018: 45,000 miles driven

Year 2019: 40,000 miles driven

Year 2020: 15,000 miles driven

Total Miles Driven: 120,000 miles

1. Using the straight-line method of depreciation, calculate the following amounts for the car for each of the four years of its expected life:
a.   Depreciation expense
b.   Accumulated depreciation balance
c.   Book value

2. Using the Units-of-Production method of depreciation, calculate the following amounts for the car for each of the four years of its expected life:
a.   Depreciation expense
b.   Accumulated depreciation balance
c.   Book value

3. Using the Double-Declining-Balance method of depreciation, calculate the following amounts for the car for each of the four years of its expected life:
a.   Depreciation expense
b.   Accumulated depreciation balance
c.   Book value

4. Using the Double-Declining-Balance method of depreciation, calculate the following and record the appropriate journal entry assuming all events occurred at end of 2018.
a.   Assume the car was involved in an accident, damaged beyond repair, and disposed of.
b.   Assume the car was involved in an accident and sold for $1,000.
c.   Assume the car was limited edition and resold for $24,000.

Solutions

Expert Solution

For calculation ref:

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

On January 1, 2017, Abraham SA purchased the following two machines for use in its production...
On January 1, 2017, Abraham SA purchased the following two machines for use in its production process. Machine A: The cash price of this machine was €55,000. Related expenditures included: sales tax €3,300, shipping costs €325, insurance during shipping €75, installation and testing costs €1,300, and €90 of oil and lubricants to be used with the machinery during its first year of operation. Abraham estimates that the useful life of the machine is 4 years with a €6,000 residual value...
On January 1, 2017, Evers Company purchased the following two machines for use in its production...
On January 1, 2017, Evers Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $52,000. Related expenditures included: sales tax $3,100, shipping costs $200, insurance during shipping $120, installation and testing costs $50, and $150 of oil and lubricants to be used with the machinery during its first year of operations. Evers estimates that the useful life of the machine is 5 years with a $5,500 salvage value...
Lina purchased a new car for use in her business during 2019. The auto was the...
Lina purchased a new car for use in her business during 2019. The auto was the only business asset she purchased during the year and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2019 and 2020 (Lina doesn’t want to take bonus depreciation for 2019 or 2020) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1, Table 2, and Exhibit 10-10.) 1.The vehicle...
Lina purchased a new car for use in her business during 2019. The auto was the...
Lina purchased a new car for use in her business during 2019. The auto was the only business asset she purchased during the year and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2019 and 2020 (Lina doesn’t want to take bonus depreciation for 2019 or 2020) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1, Table 2, and Exhibit 10-10.) b. The...
Lina purchased a new car for use in her business during 2019. The auto was the...
Lina purchased a new car for use in her business during 2019. The auto was the only business asset she purchased during the year and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2019 and 2020 (Lina doesn’t want to take bonus depreciation for 2019 or 2020) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1, Table 2, and Exhibit 10-10.) The vehicle...
Lina purchased a new car for use in her business during 2019. The auto was the...
Lina purchased a new car for use in her business during 2019. The auto was the only business asset she purchased during the year and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2019 and 2020 (Lina doesn’t want to take bonus depreciation for 2019 or 2020) in the following alternative scenarios (assuming half-year convention for all a. The vehicle cost $32,800 and business use is 100 percent...
Assume that Bloomer Company purchased a new machine on January 1, 2017, for $64,700. The machine...
Assume that Bloomer Company purchased a new machine on January 1, 2017, for $64,700. The machine has an estimated useful life of nine years and a residual value of $6,470. Bloomer has chosen to use the straight-line method of depreciation. On January 1, 2019, Bloomer discovered that the machine would not be useful beyond December 31, 2022, and estimated its value at that time to be $2,200. Required: 1. Calculate the depreciation expense, accumulated depreciation, and book value of the...
Simpson Company purchased a new machine for $80,000 on January 1, 2017. The machine has an...
Simpson Company purchased a new machine for $80,000 on January 1, 2017. The machine has an expected salvage value of $5,000, and is expected to used 187,500 hours over its estimated useful life of 15 years. Actual hours used were 11,000 in 2017 and 13,000 in 2018. Determine the following: ________________ Depreciation expense for 2017 under the straight-line method ________________ Depreciation expense for 2018 under the straight-line method ________________ Book value at the end of 2018 under the straight-line method...
Eagle Company purchased a car for its business activities on September 1, 2019, for $45,000. The...
Eagle Company purchased a car for its business activities on September 1, 2019, for $45,000. The expected useful life of the car is 4 years and its residual (salvage) value is $15,000. Company uses straight line depreciation method for its cars. REQUIRED: Compute the depreciation expense for 2019. Record the necessary adjusting entry (journal entry) as of December 31, 2019 for depreciation and show their effects on the financial statements (Income Statement for 2019 and Balance sheet as of December...
Private cars is a medium size car manufacturer planning to start a new business of sports...
Private cars is a medium size car manufacturer planning to start a new business of sports cars. As part of Initial investment, the firm needs to purchase manufacturing equipment worth $ 10 million today and also incur an additional R&D cost of $ 2 million. The equipment will be depreciated in equal amounts over the next 10 years. In the first year, the firm expects to sell 100 cars at $ 25,000 each and the manufacturing cost is estimated to...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT