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E8-10 (Algo) Computing Depreciation under Alternative Methods LO8-3 Strong Metals Inc. purchased a new stamping machine...
E8-10 (Algo) Computing Depreciation under Alternative Methods LO8-3
Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of $1,900,000. The estimated residual value was $100,000. Assume that the estimated useful life was five years and the estimated productive life of the machine was 300,000 units. Actual annual production was as follows:
| Year | Units |
| 1 | 70,000 |
| 2 | 67,000 |
| 3 | 50,000 |
| 4 | 73,000 |
| 5 | 40,000 |
Required:
1. Complete a separate depreciation schedule for each of the alternative methods.
a. Straight-line.
b. Units-of-production.
c. Double-declining-balance.
This is the chart to use for each question. Boxes with a dash in it do not have to be filled.
| Year | Depreciation Expense | Accumulated Depreciation | Net Book Value |
|---|---|---|---|
| At acquisition | - | - | |
| 1 | |||
| 2 | |||
| 3 | |||
| 4 | |||
| 5 |
Solutions
Expert Solution
| Straight Line method | ||||||
| Year | Cost of asset | Depreciable cost | Depreciation rate | Depreciation expenses | Accumulated Depreciation | Book value |
| At Acquistion | $19,00,000 | |||||
| 1 | $19,00,000 | $18,00,000 | 20.00% | $3,60,000 | $3,60,000 | $15,40,000 |
| 2 | $19,00,000 | $18,00,000 | 20.00% | $3,60,000 | $7,20,000 | $11,80,000 |
| 3 | $19,00,000 | $18,00,000 | 20.00% | $3,60,000 | $10,80,000 | $8,20,000 |
| 4 | $19,00,000 | $18,00,000 | 20.00% | $3,60,000 | $14,40,000 | $4,60,000 |
| 5 | $19,00,000 | $18,00,000 | 20.00% | $3,60,000 | $18,00,000 | $1,00,000 |
| Units of production | ||||||
| Date | Depreciable cost | Depreciation per unit | No. of units | Depreciation expenses | Accumulated Depreciation | Book value |
| At Acquistion | $19,00,000 | |||||
| 1 | $18,00,000 | $6.00 | 70000 | $4,20,000 | $4,20,000 | $14,80,000 |
| 2 | $18,00,000 | $6.00 | 67000 | $4,02,000 | $8,22,000 | $10,78,000 |
| 3 | $18,00,000 | $6.00 | 50000 | $3,00,000 | $11,22,000 | $7,78,000 |
| 4 | $18,00,000 | $6.00 | 73000 | $4,38,000 | $15,60,000 | $3,40,000 |
| 5 | $18,00,000 | $6.00 | 40000 | $2,40,000 | $18,00,000 | $1,00,000 |
| Double Declining balance | ||||||
| Date | Cost of asset | Book Value | DDB Rate | Depreciation expenses | Accumulated Depreciation | Book value |
| At Acquistion | $19,00,000 | |||||
| 1 | $19,00,000 | $19,00,000 | 40.00% | $7,60,000 | $7,60,000 | $11,40,000 |
| 2 | $19,00,000 | $11,40,000 | 40.00% | $4,56,000 | $12,16,000 | $6,84,000 |
| 3 | $19,00,000 | $6,84,000 | 40.00% | $2,73,600 | $14,89,600 | $4,10,400 |
| 4 | $19,00,000 | $4,10,400 | 40.00% | $1,64,160 | $16,53,760 | $2,46,240 |
| 5 | $19,00,000 | $2,46,240 | 40.00% | $98,496 | $17,52,256 | $1,47,744 |
ekkarill92 answered 2 hours agoRelated Solutions
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purchased a new stamping machine at the beginning of the year at a
cost of $1,330,000. The estimated residual value was $70,000.
Assume that the estimated useful life was five years and the
estimated productive life of the machine was 300,000 units. Actual
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Year
Units
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Strong Metals Inc. purchased a new stamping machine at the
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residual value was $70,000. Assume that the estimated useful life
was five years and the estimated productive life of the machine was
300,000 units. Actual annual production was as follows:
Year
Units
1
70,000
2
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1. Complete a separate depreciation schedule
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