Question

In: Accounting

The Mardova Clinic purchased a new surgical laser for $72,000 on January 1, 2020. The estimated...

The Mardova Clinic purchased a new surgical laser for $72,000 on January 1, 2020. The estimated salvage value is $8,000. The laser has a useful life of four years and the clinic expects to use it 8,000 hours. It was used 2,600 hours in year 1; 2,400 hours in year 2; 2,200 hours in year 3; and 2,000 hours in year 4.

Compute the annual depreciation expense, accumulated depreciation, and book value for each of the four years under each of the following four methods and answer the questions in the response template below:

A) Straight-line  

B) Units of Activity  

C) 150% Declining Balance

D) Sum of the Years Digits

A) Straight-line  

1) Year 1 - Depreciation expense $

2) Year 2 - Accumulated depreciation $

3) Year 3 - Book value $

4) Year 4 - Depreciation expense $

B) Units of Activity  

5) Year 1 - Depreciation expense $

6) Year 2 - Accumulated depreciation $

7) Year 3 - Book value $

8) Year 4 - Depreciation expense $

C) 150% Declining Balance

9) Year 1 - Depreciation expense $

10) Year 2 - Accumulated depreciation $

11) Year 3 - Book value $

12) Year 4 - Depreciation expense $

D) Sum of the Years Digits

13) Year 1 - Depreciation expense $

14) Year 2 - Accumulated depreciation $

15) Year 3 - Book value $

16) Year 4 - Depreciation expense $

Solutions

Expert Solution

Answer A

1)-Year 1- Depreciation Expense= $16000

2)- Year 2-Accumulated Depreciation= $32000

3)- Year 3=Book Value= $24000

4)-Year 4- Depreciation Expense= $16000

Workings

Year Deprciation Expense Accumulated Dep. Book Value
1 72000-8000/4=16000 16000 56000
2 72000-8000/4=16000 32000 40000
3 72000-8000/4=16000 48000 24000
4 72000-8000/4=16000 64000 8000

Answer B

5)-Year 1- Depreciation Expense= $20800

6)- Year 2-Accumulated Depreciation= $40000

7)- Year 3=Book Value= $14400

8)-Year 4- Depreciation Expense= $6400

Workings

Year Deprciation Expense Accumulated Dep. Book Value
1 2600*8=20800 20800 51200
2 2400*8=19200 40000 32000
3 2200*8=17600 57600 14400
4 6400 64000 8000

Depreciation Per Hour=72000-8000/8000=8

Year 4 = 14400-8000=6400

last year depreciation could not be 2000*8=16000 because we need Year 4 value 8000  

Answer C

9)-Year 1- Depreciation Expense= $27000

10)- Year 2-Accumulated Depreciation= $43875

11)- Year 3=Book Value= $17578.125

12)-Year 4- Depreciation Expense= $9578.125

Workings

Year Beg. BV Rate Depreciation Expense Accumlated Dep, Ending BV
1 72000 37.5% 27000 27000 45000
2 45000 37.5% 16875 43875 28125
3 28125 37.5% 10546.875 54421.875 17578.125
4 17578.125 9578.125 64000 8000

RATE=100/4*150%=37.5%

4th Year Depreciation will be balance of Beg. BV and Salvage Value

Answer D

13)-Year 1- Depreciation Expense= $25600

14)- Year 2-Accumulated Depreciation= $44800

15)- Year 3=Book Value= $14400

16)-Year 4- Depreciation Expense= $6400

Workings

Year Year of digit Depreciation Expense Accumulated Depreciation Book Value
1 4 72000-8000*4/10=25600 25600 46400
2 3 72000-8000*3/10=19200 44800 27200
3 2 72000-8000*2/10=12800 57600 14400
4 1 72000-8000*1/10=6400 64000 8000
10

Related Solutions

The Mardova Clinic purchased a new surgical laser for $72,000 on January 1, 2020. The estimated...
The Mardova Clinic purchased a new surgical laser for $72,000 on January 1, 2020. The estimated salvage value is $8,000. The laser has a useful life of four years and the clinic expects to use it 8,000 hours. It was used 2,600 hours in year 1; 2,400 hours in year 2; 2,200 hours in year 3; and 2,000 hours in year 4. Compute the annual depreciation expense, accumulated depreciation, and book value for each of the four years under each...
On January 1, 2020, The Fio Corporation purchased a machine for $600,000. The corporation estimated a...
On January 1, 2020, The Fio Corporation purchased a machine for $600,000. The corporation estimated a 5-year useful life (or 300,000 units of useful life) and $60,000 residual/salvage value. 45000 Units were produced in 2020. 6 points: Complete the following table using the indicated depreciation method and year for each row of the table. Method Depreciation expense Accumulated depreciation Book value Straight-line for 2020 Double-declining balance 2020 Double-declining balance 2021 Units-of-production 2020             4 points: What would...
An asset was purchased on January 1, 2020 for $150,000. The estimated useful life is 5...
An asset was purchased on January 1, 2020 for $150,000. The estimated useful life is 5 years and 31,250 units. With the residual value being $25,000 prepare a schedule of depreciation for each of the Straight-line method, Double Declining Method and the Units of Production method. The units to be produced are as follows: Year 1 5,000 units, Year 2 4,000 units, Year 3 6,000 units, Year 4 10,000 units and Year 5 12,000 units. What is the depreciation expense...
Metlock Company purchased machinery on January 1, 2020, for $88,000. The machinery is estimated to have...
Metlock Company purchased machinery on January 1, 2020, for $88,000. The machinery is estimated to have a salvage value of $8,800 after a useful life of 8 years. New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect. Compute 2020 depreciation expense using the double-declining-balance method. Depreciation expense $enter Depreciation expense in dollars eTextbook and Media       New attempt is in progress. Some of the new entries may impact the...
heffield Company purchased machinery on January 1, 2020, for $93,600. The machinery is estimated to have...
heffield Company purchased machinery on January 1, 2020, for $93,600. The machinery is estimated to have a salvage value of $9,360 after a useful life of 8 years. New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect. Compute 2020 depreciation expense using the sum-of-the-years'-digits method. Depreciation expense $enter Depreciation expense in dollars eTextbook and Media       New attempt is in progress. Some of the new entries may impact the...
Bonita Company purchased machinery on January 1, 2020, for $87,200. The machinery is estimated to have...
Bonita Company purchased machinery on January 1, 2020, for $87,200. The machinery is estimated to have a salvage value of $8,720 after a useful life of 8 years. Compute 2020 depreciation expense using the double-declining-balance method. Compute 2020 depreciation expense using the double-declining-method method assuming the machinery was purchased on September 1, 2020.
1. Cutter Enterprises purchased equipment for $72,000 on January 1, 2018. The equipment is expected to...
1. Cutter Enterprises purchased equipment for $72,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $6,000. Using the sum-of-the-years'-digits method, depreciation for 2019 and book value at December 31, 2019, would be: Multiple Choice $19,200 and $30,800 respectively. $19,200 and $28,800 respectively. $17,600 and $26,400 respectively. $17,600 and $32,400 respectively. 2. Cutter Enterprises purchased equipment for $66,000 on January 1, 2018. The equipment is expected to have a five-year life...
On January 1, 2019, Chelsea Company purchased for $180,000 a new machine that has an estimated...
On January 1, 2019, Chelsea Company purchased for $180,000 a new machine that has an estimated useful life of ten years (or 550,000 stamping operations), after which the expected salvage value is $10,000. Under each of the following depreciation methods, calculate the depreciation expense for 2019. Please show work :) Required: Straight-line depreciation Double-declining balance depreciation Units-of-production depreciation, if 66,000 stamping operations were made in 2019
On January 1, 2020, Concord Corporation purchased a new machine for $4130000. The new machine has...
On January 1, 2020, Concord Corporation purchased a new machine for $4130000. The new machine has an estimated useful life of nine years and the salvage value was estimated to be $143000. Depreciation was computed using the sum-of-the-years'-digits method. What amount should be shown in Concord's balance sheet at December 31, 2021, net of accumulated depreciation, for this machine? $2535200 $3987000 $3332600 $2623800
Cutter Enterprises purchased equipment for $72,000 on January 1, 2021. The equipment is expected to have...
Cutter Enterprises purchased equipment for $72,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $6,000. Using the straight-line method, depreciation for 2022 and the equipment's book value at December 31, 2022, would be: Multiple Choice $14,400 and $43,200 respectively. $13,200 and $39,600 respectively. $13,200 and $45,600 respectively. $28,800 and $37,200 respectively.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT