Question
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Depreciation and Rate of Return Burrell Company purchased a machine for $51,000 on January 2, 2016....
Depreciation and Rate of Return
Burrell Company purchased a machine for $51,000 on January 2, 2016. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $25,500 each year. The tax rate is 25%.
Required:
Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double-declining-balance depreciation methods. Assume that the machine is the company's only asset.
Straight-line method. Do not round intermediate calculations. Round final answers to two decimal places.
| 2016 | % |
| 2017 | % |
| 2018 | % |
| 2019 | % |
| 2020 | % |
Double-declining-balance depreciation method. Do not round
intermediate calculations. Round final answers to two decimal
places.
| 2016 | % |
| 2017 | % |
| 2018 | % |
| 2019 | % |
| 2020 | % |
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Depreciation and Rate of Return Burrell Company purchased a machine for $19000 on January 2, 2016....
Depreciation and Rate of Return
Burrell Company purchased a machine for $19000 on January 2,
2016. The machine has an estimated service life of 5 years and a
zero estimated residual value. The asset earns income before
depreciation and income taxes of $9500 each year. The tax rate is
35%.
Required:
Compute the rate of return earned (on the average net asset
value) by the company each year of the asset's life under the
straight-line and the double-declining-balance depreciation
methods....
Burrell Company purchased a machine for $49000 on January 2, 2016. The machine has an estimated...
Burrell Company purchased a machine for $49000 on January 2,
2016. The machine has an estimated service life of 5 years and a
zero estimated residual value. The asset earns income before
depreciation and income taxes of $24500 each year. The tax rate is
25%.
Required:
Compute the rate of return earned (on the average net asset
value) by the company each year of the asset's life under the
straight-line and the double-declining-balance depreciation
methods. Assume that the machine is...
Depreciation Methods Gruman Company purchased a machine for $198,000 on January 2, 2016. It made the...
Depreciation Methods
Gruman Company purchased a machine for $198,000 on January 2,
2016. It made the following estimates:
Service life
5 years or 10,000 hours
Production
180,000 units
Residual value
$ 18,000
In 2016, Gruman uses the machine for 1,700 hours and produces
45,000 units. In 2017, Gruman uses the machine for 1,200 hours and
produces 32,000 units. If required, round your final answers to the
nearest dollar.
If Gruman used a service life of 8 years or 15,000 hours...
Depreciation Methods Gruman Company purchased a machine for $198,000 on January 2, 2016. It made the...
Depreciation Methods Gruman Company purchased a machine for
$198,000 on January 2, 2016. It made the following estimates:
Service life 5 years or 10,000 hours Production 180,000 units
Residual value $ 18,000 In 2016, Gruman uses the machine for 2,000
hours and produces 40,000 units. In 2017, Gruman uses the machine
for 1,400 hours and produces 32,000 units. If required, round your
final answers to the nearest dollar.
Required: Compute the depreciation for 2016 and 2017 under each
of the...
Depreciation Methods Gruman Company purchased a machine for $198,000 on January 2, 2016. It made the...
Depreciation Methods
Gruman Company purchased a machine for $198,000 on January 2,
2016. It made the following estimates:
Service life
5 years or 10,000 hours
Production
180,000 units
Residual value
$ 18,000
In 2016, Gruman uses the machine for 2,000 hours and produces
40,000 units. In 2017, Gruman uses the machine for 1,400 hours and
produces 32,000 units. If required, round your final answers to the
nearest dollar.
Required:
Compute the depreciation for 2016 and 2017 under each of the...
EXPLAIN STEP PLEASE Depreciation Methods Gruman Company purchased a machine for $220,000 on January 2, 2016....
EXPLAIN STEP PLEASE
Depreciation Methods
Gruman Company purchased a machine for $220,000 on January 2,
2016. It made the following estimates:
Service life
5 years or 10,000 hours
Production
200,000 units
Residual value
$20,000
In 2016, Gruman uses the machine for 1,800 hours and produces
44,000 units. In 2017, Gruman uses the machine for 1,500 hours and
produces 35,000 units. If required, round your final answers to the
nearest dollar.
Required:
Compute the depreciation for 2016 and 2017 under each...
Depreciation Methods Winsey Company purchased equipment on January 2, 2016, for $700,000. The equipment has the...
Depreciation
Methods
Winsey Company
purchased equipment on January 2, 2016, for $700,000. The equipment
has the following characteristics:
Estimated service life
16 years, 80,000 hours, or 750,000 units of output
Estimated residual value
$50,000
During 2016 and 2017,
the company used the machine for 4,500 and 5,500 hours,
respectively, and produced 40,000 and 60,000 units,
respectively.
2016
2017
Straight-line method
$
$
Activity method (hours worked)
$
$
Activity method (units of output)
$
$
Sum-of-the-years'-digits method
$
$
Double-declining-balance...
Depreciation Methods Winsey Company purchased equipment on January 2, 2016, for $700,000. The equipment has the...
Depreciation Methods
Winsey Company purchased equipment on January 2, 2016, for
$700,000. The equipment has the following characteristics:
Estimated service life
20 years, 100,000 hours, 950,000 units of output
Estimated residual value
$50,000
During 2016 and 2017, the company used the machine for 4,500 and
5,500 hours, respectively, and produced 40,000 and 60,000 units,
respectively.
Required:
Compute depreciation expense for 2016 under each of the
following methods:
Round the depreciation rate per hour to 3 decimal places and
depreciation rate...
Acura Company purchased a machine on January 1, 2016 for $625,000. The machine has a four...
Acura Company purchased a machine on January 1, 2016 for
$625,000. The machine has a four year useful life and a salvage
value of $20,000. The machine was depreciated using sum of the
years digits. On January 1, 2018, two years later, it was
determined they should have used straight line depreciation and
decided to change to straight line. The useful life was also
extended by three years, and the salvage value was reduced to
$15,000. Profit for 2016 was...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, 2016, Fischer Company purchases a machine that manufactures...
Computing Straight-Line and Double-Declining-Balance
Depreciation
On January 2, 2016, Fischer Company purchases a machine that
manufactures a part for one of its key products. The machine cost
$529,200 and is estimated to have a useful life of six years, with
an expected salvage value of $45,000.
Compute depreciation expense for 2016 and 2017 for the following
depreciation methods.
a. Straight-line.
b. Double-declining balance.
2016
2017
Straight-line
$Answer
$Answer
Double-declining
Answer
Answer
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