Question
In: Accounting
Crane Company purchased equipment on March 27, 2018, at a cost of $284,000. Management is contemplating...
|
|
Solutions
Expert Solution
Answer:
Cost of the Equipment =$284000
Residual value =$4,000
Deprecible value =$280,000
Useful life=4 years
A.) Straight line method
Annual Depreciation=Depreciation value / Life
Year 2018 =$280,000/4 =$70,000
Year 2019 =$280,000/4 =$70,000
Year 2020 =$280,000/4 =$70,000
Year 2021 =$280,000/4 =$70,000
Year 2022=$0
B.) Double declining balance method
Depreciation rate =2/ Useful life =2/4 =50%
| Year | Book value | Rate | Depreciation | Accumulated depreciation | Carrying value |
| 2018 | $284,000 | 50% | $142,000 | $142,000 | 142,000 |
| 2019 | $142,000 | 50% | $71,000 | $213,000 | $71,000 |
| 2020 | $71,000 | 50% | $35,500 | $248,500 | $35,500 |
| 2021 | $35,500 | 50% | $17750 | $266,250 | $17,750 |
| 2022 | $17750 | 50% | $8,875 | $275,125 | $8,875 |
C.) Units of production method
Annual Depreciation =Deprecible value/ Production units
=$280,000/80,000
=$3.5
| Year | Production(a) | Depreciation rate(b) | Depreciation Expense(a×b) | Accumulated depreciation |
| 2018 | 14,200 | $3.5 | $49,700 | $49,700 |
| 2019 | 20,600 | $3.5 | $72,100 | $121,800 |
| 2020 | 20,200 | $3.5 | $70,700 | $192,500 |
| 2021 | 20,000 | $3.5 | $70,000 | $262,500 |
| 2022 | 5,000 | $3.5 | $17,500 | $280,000 |
ekkarill92 answered 2 years agoRelated Solutions
Crane Company purchased equipment on March 27, 2018, at a cost of $228,000. Management is contemplating...
Crane Company purchased equipment on March 27, 2018, at a cost of
$228,000. Management is contemplating the merits of using the
diminishing-balance or units-of-production method of depreciation
instead of the straight-line method, which it currently uses for
other equipment. The new equipment has an estimated residual value
of $4,000 and an estimated useful life of either four years or
80,000 units. Demand for the products produced by the equipment is
sporadic so the equipment will be used more in some...
Wildhorse Co. purchased equipment on March 27, 2018, at a cost of $ 264,000. Management is...
Wildhorse Co. purchased equipment on March 27, 2018, at a cost
of $ 264,000. Management is contemplating the merits of using the
diminishing-balance or units-of-production method of depreciation
instead of the straight-line method, which it currently uses for
other equipment. The new equipment has an estimated residual value
of $ 8,000 and an estimated useful life of either four years or
80,000 units. Demand for the products produced by the equipment is
sporadic so the equipment will be used more...
Crane Productions Corp. purchased equipment on March 1, 2018, for $ 63,000. The company estimated the...
Crane Productions Corp. purchased equipment on March 1, 2018,
for $ 63,000. The company estimated the equipment would have a
useful life of three years and produce 12,000 units, with a
residual value of $ 8,400. During 2018, the equipment produced
4,900 units. On November 30, 2019, the machine was sold for $
20,000 and had produced 5,700 units that year.
Record all the necessary entries for the years ended December
31, 2018 and 2019, using the following depreciation methods:...
Crane Enterprises purchased equipment on March 15, 2018, for $81,030. The company also paid the following...
Crane Enterprises purchased equipment on March 15, 2018, for
$81,030. The company also paid the following amounts: $550 for
freight charges; $219 for insurance while the equipment was in
transit; $1,690 for a one-year insurance policy; $2,012 to train
employees to use the new equipment; and $2,521 for testing and
installation. The equipment was ready for use on April 1, but the
company did not start using it until May 1.
Crane has estimated the equipment will have a 10-year...
On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The...
On March 31, 2018, the Herzog Company purchased a factory
complete with machinery and equipment. The allocation of the total
purchase price of $930,000 to the various types of assets along
with estimated useful lives and residual values are as follows:
Asset
Cost
Estimated Residual Value
Estimated Useful
Life in Years
Land
$
135,000
N/A
N/A
Building
430,000
none
20
Machinery
230,000
12% of cost
10
Equipment
135,000
$
13,000
4
Total
$
930,000
On June 29, 2019, machinery included...
On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The...
On March 31, 2018, the Herzog Company purchased a factory
complete with machinery and equipment. The allocation of the total
purchase price of $1,090,000 to the various types of assets along
with estimated useful lives and residual values are as follows:
Asset
Cost
Estimated Residual Value
Estimated Useful
Life in Years
Land
$
145,000
N/A
N/A
Building
590,000
none
20
Machinery
150,000
12% of cost
8
Equipment
205,000
$
16,000
6
Total
$
1,090,000
On June 29, 2019, machinery included...
On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The...
On March 31, 2018, the Herzog Company purchased a factory
complete with machinery and equipment. The allocation of the total
purchase price of $1,050,000 to the various types of assets along
with estimated useful lives and residual values are as follows:
Asset
Cost
Estimated Residual Value
Estimated Useful
Life in Years
Land
$
125,000
N/A
N/A
Building
550,000
none
20
Machinery
190,000
12% of cost
8
Equipment
185,000
$
13,000
4
Total
$
1,050,000
On June 29, 2019, machinery included...
On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The...
On March 31, 2018, the Herzog Company purchased a factory
complete with machinery and equipment. The allocation of the total
purchase price of $950,000 to the various types of assets along
with estimated useful lives and residual values are as follows:
Asset
Cost
Estimated Residual Value
Estimated Useful
Life in Years
Land
$
125,000
N/A
N/A
Building
450,000
none
20
Machinery
250,000
12% of cost
10
Equipment
125,000
$
13,000
4
Total
$
950,000
On June 29, 2019, machinery included...
On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The...
On March 31, 2018, the Herzog Company purchased a factory
complete with machinery and equipment. The allocation of the total
purchase price of $1,050,000 to the various types of assets along
with estimated useful lives and residual values are as follows:
Asset
Cost
Estimated Residual Value
Estimated Useful
Life in Years
Land
$
125,000
N/A
N/A
Building
550,000
none
20
Machinery
190,000
12% of cost
8
Equipment
185,000
$
13,000
4
Total
$
1,050,000
On June 29, 2019, machinery included...
On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The...
On March 31, 2018, the Herzog Company purchased a factory
complete with machinery and equipment. The allocation of the total
purchase price of $1,040,000 to the various types of assets along
with estimated useful lives and residual values are as follows:
Asset
Cost
Estimated Residual Value
Estimated Useful
Life in Years
Land
$
120,000
N/A
N/A
Building
540,000
none
25
Machinery
200,000
10% of cost
6
Equipment
180,000
$
15,000
5
Total
$
1,040,000
On June 29, 2019, machinery included...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- How is the internet affecting our everyday life? I just need a rough draft for this...
- Please explain your view of the most difficult aspect of Customs Compliance?
- You are required to write an interactive program that prompts the user for seven (7) real...
- Describe in detail the five-forces model of industry competition. What causes each of the forces to...
- Java Programming. I'm writing this in an IDE called Eclipse. If you could also use comments...
- Scenario: You are a departmental manager in a large community hospital in an urban area. Your...
- Need to answer the following 3 questions from "The Sixties, AMerican Yawp" (just google, you will...
ADVERTISEMENT