Question

In: Accounting

Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a...

Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of 5 years, or 14,000 operating hours, and a residual value of $10,000.  Compute the depreciation for the first and second years of use by each of the following methods:

Straight Line Depreciation - Full Year Depreciation
Year Cost

Accum Depr at Beg of Year

Book Value at Beg of Year

Straight Line Rate

Depr for Year

Book Value at End of Year

1 $360,000.00 $0.00 $360,000.00 x
2 360,000 0 360,000 x
3 360,000 0 360,000 x
4 360,000 0 360,000 x
5 360,000 0 360,000 x
0%
Units of Output - Full Year Depreciation
Year Cost

Accum Depr at Beg of Year

Book Value at Beg of Year

Units of Activity

Cost Per Unit

Depr for Year

Book Value at End of Year

1 $360,000.00 $0.00 $360,000.00 x 1,200
2 360,000 0 360,000 x 2,250
3 360,000 0 360,000 x 3,000
4 360,000 0 360,000 x 4,350
5 360,000 0 360,000 x 3,200
14,000
Double Declining Balance - Full Year Depreciation
Year Cost

Accum Depr at Beg of Year

Book Value at Beg of Year

Double Declining Balance Rate

Depr for Year

Book Value at End of Year

1 $360,000.00 $0.00 $360,000.00 x
2 360,000 0 360,000 x
3 360,000 0 360,000 x
4 360,000 0 360,000 x
5 360,000 0 360,000 x

Solutions

Expert Solution

Straight Line Depreciation - Full Year Depreciation
Year Cost

Accum Depr at Beg of Year

Book Value at Beg of Year

Straight Line Rate

Depr for Year

Book Value at End of Year

1 $360,000.00 $0.00 $360,000.00 x 20% 350000*20% = 70000 360000-70000 = 290000
2 360,000 70000 290000 x 20% 70000 220000
3 360,000 70000 220000 x 20% 70000 150000
4 360,000 70000 150000 x 20% 70000 80000
5 360,000 70000 80000 x 20% 70000 10000
0%
Units of Output - Full Year Depreciation
Year Cost

Accum Depr at Beg of Year

Book Value at Beg of Year

Units of Activity

Cost Per Unit

Depr for Year

Book Value at End of Year

1 $360,000.00 $0.00 $360,000.00 x 1,200 25 30000 330000
2 360,000 30000 330000 x 2,250 25 56250 273750
3 360,000 56250 273750 x 3,000 25 75000 198750
4 360,000 75000 198750 x 4,350 25 108750 90000
5 360,000 108750 90000 x 3,200 25 80000 10000
14,000
Double Declining Balance - Full Year Depreciation
Year Cost

Accum Depr at Beg of Year

Book Value at Beg of Year

Double Declining Balance Rate

Depr for Year

Book Value at End of Year

1 $360,000.00 $0.00 $360,000.00 x 40% 144000 216000
2 360,000 144000 216000 x 40% 86400 129600
3 360,000 230400 129600 x 40% 51840 77760
4 360,000 282240 77760 x 40% 31104 46656
5 360000 313344

46656

* 40% 36656 10000

Related Solutions

Equipment purchased at the beginning of the fiscal year for $840,000 is expected to have a...
Equipment purchased at the beginning of the fiscal year for $840,000 is expected to have a useful life of 10 years, or 400,000 operating hours, and a residual value of $40,000. Compute the depreciation for the first and second years of use by each of the following methods: a) straight-line b) units-of-production (10,000 hours first year; 15,000 hours second year) c) declining-balance at twice the straight-line rate (Round the answer to the nearest dollar.)
                  Equipment purchased at the beginning of the fiscal year for $455,000 is expected to have...
                  Equipment purchased at the beginning of the fiscal year for $455,000 is expected to have a useful life of 5 years, or 15,000 operating hours, and a residual value of $3,000. Compute the depreciation for the first and second years of use by each of the following methods: (a) straight-line (b) units-of-production (2,500 hours first year; 3,250 hours second year) (c) declining-balance at twice the straight-line rate (Round the answer to the nearest dollar.) First Year                (a) straight-line...
Assume that TarMart purchased equipment at the beginning of fiscal year 2016 for $480,000 cash.  The equipment...
Assume that TarMart purchased equipment at the beginning of fiscal year 2016 for $480,000 cash.  The equipment had an estimated useful life of 8 years and a residual value of $30,000.                1.         What would depreciation expense be for year 3 under the straight-line method? 2.         What would depreciation expense be for year 3 under the double-declining balance method? 3.         What is the first year in which depreciation expense under the straight-line method is higher than under the declining balance method?              4.         Assume TarMart...
Equipment is purchased for $ 250,000 in year 0 and is expected to sell for $...
Equipment is purchased for $ 250,000 in year 0 and is expected to sell for $ 25,000 after 5 years of use. Suppose the company estimates income and expenses of the equipment for the following first year of operation: Income $ 600,000, Expenses $ 260,000, Depreciation $ 45,000. If the company pays taxes at a rate of 35%, what is the after-tax cash flow for the first year? 
New lithographic equipment, acquired at a cost of $940,000 at the beginning of a fiscal year,...
New lithographic equipment, acquired at a cost of $940,000 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $105,750. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected. In the first week of the fifth year, the equipment was sold for $151,924. Required: 1....
New lithographic equipment, acquired at a cost of $800,000 at the beginning of a fiscal year,...
New lithographic equipment, acquired at a cost of $800,000 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $90,000. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected. In the first week of the fifth year, the equipment was sold for $134,570. Required: 1....
Perdue Company purchased equipment on April 1 for $82,620. The equipment was expected to have a...
Perdue Company purchased equipment on April 1 for $82,620. The equipment was expected to have a useful life of three years, or 5,940 operating hours, and a residual value of $2,430. The equipment was used for 1,100 hours during Year 1, 2,100 hours in Year 2, 1,800 hours in Year 3, and 940 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by...
Perdue Company purchased equipment on April 1 for $50,490. The equipment was expected to have a...
Perdue Company purchased equipment on April 1 for $50,490. The equipment was expected to have a useful life of three years, or 7,560 operating hours, and a residual value of $1,350. The equipment was used for 1,400 hours during Year 1, 2,600 hours in Year 2, 2,300 hours in Year 3, and 1,260 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by...
Perdue Company purchased equipment on April 1 for $58,320. The equipment was expected to have a...
Perdue Company purchased equipment on April 1 for $58,320. The equipment was expected to have a useful life of three years, or 8,100 operating hours, and a residual value of $1,620. The equipment was used for 1,500 hours during Year 1, 2,800 hours in Year 2, 2,400 hours in Year 3, and 1,400 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by...
kansas enterprises purchased equipment for 81,500 on January 1,2021. the equipment is expected to have a...
kansas enterprises purchased equipment for 81,500 on January 1,2021. the equipment is expected to have a five - year service life, with a residual value of 8,250 at the end of five years. using the double- declining balance method, depreciation expense for 2021 would be
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT