Question

In: Accounting

In early January 2017, NewTech purchases computer equipment for $273,000 to use in operating activities for...


In early January 2017, NewTech purchases computer equipment for $273,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $26,000.

rev: 07_27_2017_QC_CS-94103

Exercise 8-7 Straight-line depreciation LO P1

Prepare a table showing depreciation and book value for each of the four years assuming straight-line depreciation.

Prepare a table showing depreciation and book value for each of the four years assuming double-declining-balance depreciation.

Solutions

Expert Solution

Straight-line depreciation means that the computer equipment will be depreciated equally for the next four years.

Depreciation amount = (Purchase amount - Salvage Value ) / Useful life

= ($273,000 - $26,000) / 4

= $61,750.

Year Book value in the beginning Depreciation Book value in the End
1 $273,000 $61,750 $211,250
2 $211,250 $61,750 $149,500
3 $149,500 $61,750 $87,750
4 $87,750 $61,750 $26,000

Double-declining balance depreciation is calculated by the following formula :

Depreciation for year 1 = ( 2 / Useful life of asset ) * ( Cost - Accumulated Depreciation )

= ( 2 / 4 ) * ( $273,000 - 0 )

= $136,500.

Depreciation for year 2 = ( 2 / 4 ) * ( $273,000 - $136,500 )

= $68,250.

Depreciation for year 3 = ( 2 / 4 ) * ( $273,000 - $136,500 - $68,250 )

= $34,125.

Book value at the starting of the year 4 = $273,000 - $136,500 - $68,250 - $34,125

= $34,125.

Salvage value = $26,000.

Therefore, the depreciation for the 4th year will be limited to = Book value at year 4 starting - Salvage value

= $34,125 - $26,000

= $8,125.

Year Book value in the beginning Depreciation Book value in the End
1 $273,000 $136,500 $136,500
2 $136,500 $68,250 $68,250
3 $68,250 $34,125 $34,125
4 $34,125 $8,125 $26,000

ekkarill92 answered 2 months ago
Next > < Previous

Related Solutions

In early January 2017, NewTech purchases computer equipment for $264,000 to use in operating activities for...
In early January 2017, NewTech purchases computer equipment for $264,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $28,000. Exercise 8-8 Double-declining-balance depreciation LO P1 Prepare a table showing depreciation and book value for each of the four years assuming double­declining­balance depreciation. (Enter all amounts positive values.) Depreciation for the Period End of Period Year Beginning­Year Book Value Depreciation Rate Annual Depreciation Accumulated Depreciation Year­End Book Value 2017 2018 2019 2020...
In early January 2016, NewTech purchases computer equipment for $190,000 to use in operating activities for...
In early January 2016, NewTech purchases computer equipment for $190,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $44,000. Prepare a table showing depreciation and book value for each of the four years assuming double-declining-balance depreciation.
In early January 2017, NewTech purchases computer equipment for $268,000 to use in operating activities for the next four years.
  In early January 2017, NewTech purchases computer equipment for $268,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $30,000. Prepare a table showing depreciation and book value for each of the four years assuming straight-line depreciation.     Straight-Line Depreciation   Choose Numerator: / Choose Denominator: = Annual Depreciation Expense   Beginning book value/Cost/Cost minus salvage (choose one) / Double the SL rate/ Estimated useful life (years)/ Total units of...
In early January 2017, NewTech purchases computer equipment for $268,000 to use in operating activities for the next four years.
In early January 2017, NewTech purchases computer equipment for $268,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $30,000. rev: 07_27_2017_QC_CS-94103 Prepare a table showing depreciation and book value for each of the four years assuming straight-line depreciation.
NewTech purchases computer equipment for $264,000 to use in operating activities for the next four years....
NewTech purchases computer equipment for $264,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $28,000. rev: 07_27_2017_QC_CS-94103 Prepare a table showing depreciation and book value for each of the four years assuming straight-line depreciation.
NewTech purchases computer equipment for $260,000 to use in operating activities for the next four years....
NewTech purchases computer equipment for $260,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $28,000. Prepare a table showing depreciation and book value for each of the four years assuming double-declining-balance depreciation.
NewTech purchases computer equipment for $154,000 to use in operating activities for the next four years....
NewTech purchases computer equipment for $154,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $25,000. Prepare a table showing depreciation and book value for each of the four years assuming straight-line depreciation.   
do you take purchases computer equipment for 266,000 to use an operating activities for the next...
do you take purchases computer equipment for 266,000 to use an operating activities for the next four years it estimates equipment salvage value is 27,000 repair a table showing appreciation book value for each of the four years assuming double declining balance depreciation
On January 2, 2015 Lev Company purchases equipment for use in fabrication of a part for...
On January 2, 2015 Lev Company purchases equipment for use in fabrication of a part for one of its key products.  The equipment costs $95,000, and its estimated useful life is 5 years, after which it is expected to be sold for $10,000. Required: a) Show how the equipment is reported on Lev’s balance sheet at the end of the third year assuming straight-line depreciation. b) Lev decides to sell the equipment on January 2nd of 2018 for $40,000.  Prepare the journal...
Early in 2017, Kingbird Equipment Company sold 600 Rollomatics during 2017 at $5,600 each. During 2017,...
Early in 2017, Kingbird Equipment Company sold 600 Rollomatics during 2017 at $5,600 each. During 2017, Kingbird spent $20,000 servicing the 2-year assurance warranties that accompany the Rollomatic. All applicable transactions are on a cash basis. Prepare 2017 entries for Kingbird. Assume that Kingbird estimates the total cost of servicing the warranties will be $58,000 for 2 years Date Account Titles and Explanation Debit Credit At SaleDuring 2017Dec. 31, 2017 At SaleDuring 2017Dec. 31, 2017 At SaleDuring 2017Dec. 31, 2017...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT