- Orange Inc. purchased a new truck on Oct 1, 2011 for $160,000. The truck was...

- Orange Inc. purchased a new truck on Oct 1, 2011 for $160,000. The truck was placed in service on the same day. The truck had an estimated life of 5 years with an estimated residual value of $10,000.

Use excel spreadsheet to prepare depreciation tables which include depreciation expenses, accumulated depreciation, and book value of the truck over the asset's life under straight line, double decline balance and sum-of-years digits methods. Mango record depreciation to the closest whole month for assets placed in service during the year.

Expert Solution

Striaght Line Method
Year	Beginning Value	Depreciation	Accumulated Depreciation	Ending Value
2011	160,000	7,500	7,500	152,500
2012	152,500	30,000	37,500	122,500
2013	122,500	30,000	67,500	92,500
2014	92,500	30,000	97,500	62,500
2015	62,500	30,000	127,500	32,500
2016	32,500	22,500	150,000	10,000

Under Straight Line Depreciation Yearly Depreciation will be = (cost - Salvage) / use ful life = 150000 / 5 = 30000

In First Year the deprecaition for 3 month from october and in 6th year remaining deprecaition amount will setoff.

Double Decling Balance Method
Year	Beginning Value	Depreciation	Accumulated Depreciation	Ending Value
2011	160,000	16,000	16,000	144,000
2012	144,000	57,600	73,600	86,400
2013	86,400	34,560	108,160	51,840
2014	51,840	20,736	128,896	31,104
2015	31,104	12,442	141,338	18,662
2016	18,662	7,465	148,803	11,197
2017	11,197	1,197	150,000	10,000

under DDB Method depreciation Rate is 40% (If using Straight line Method the rate will be 20% that is 100% divided by 5 Years)

In first year recorded 3 months only.

Sum Of ther Year Digits
Year	Beginning Value	Depreciation Percent	Depreciation	Accumulated Depreciation	Ending Value
2011	160,000	8.33%	12,500	12,500	147,500
2012	147,500	31.67%	47,500	60,000	100,000
2013	100,000	25%	37,500	97,500	62,500
2014	62,500	18.33%	27,500	125,000	35,000
2015	35,000	11.67%	17,500	142,500	17,500
2016	17,500	5%	7,500	150,000	10,000

Sum of Total Years = 5+4+3+2+1 = 15 (useful life is 5 year)in Sum of Year Digit percentage for first year

in First Year = 150000 x 5/15 x 1/ 4 (Depreciation base is 150000) = 12500

In Second Year =4.75 / 15 = 31.67%

In third Year = 3.75 / 15 = 25%

its going on

and in last year 0.75 / 15 = 5%

ekkarill92 answered 1 year ago

Tom's Truckers purchased a new truck for $160,000. The company expected the truck to last 5...

Tom's Truckers purchased a new truck for $160,000. The company expected the truck to last 5 years or 100,000 miles, with an estimated salvage value of 120,000 at the end of that time. In the first year, the truck was driven 24,000 miles. * As the account for Tom, you can depreciate this truck using the a.) Double declining balance or the b.) Units of production method. * Which method of depreciation will allow the largest write-off in the first...

On January 1, 2011, Greg's Grocery purchased a truck for $41,000 that has an estimated useful...

On January 1, 2011, Greg's Grocery purchased a truck for $41,000 that has an estimated useful life of five years and a $1,000 residual value. Greg uses the straight-line depreciation method. Record the journal entries under each of the following disposal scenarios that may occur on March 31, 2013: a. The truck is in an accident and totaled. It is scrapped for $0. There are no insurance proceeds. b. Greg sells the truck for $10,000 cash. c. Gerg sells the...

1. H Corp recently purchased a new delivery truck. The new truck has a cost of...

1. H Corp recently purchased a new delivery truck. The new truck has a cost of $56250 and is expected to generate after tax cash flows including depreciation of $15625 per year. The truck has a five year expected life. The expected year end abandonment Values (Salvage Value after tax adjustments) for the truck are given below. The company’s cost of capital is 11% Year Annual operating CF Abandonment Value 0 (56250) ---- 1 15,625 43750 2 15,625 35000 3 ...

On May 31, 2016, Sandals report purchased a truck at a cost of $160,000. before placing...

On May 31, 2016, Sandals report purchased a truck at a cost of $160,000. before placing the truck into service, The company spend $2,500 painting it, $500 replacing tires, and $5,000 overhauling the engine. The truck should remain in service for 5 years and have a residual value of $7,500. The truck’s annual mileage is expected to be 15,000 in each of the first two years and 10,000 miles in the next three years. In deciding which depreciation method to...

Henley Inc. purchased $160,000 of goods on account. On May 1, the company receives

Henley Inc. purchased $160,000 of goods on account. On May 1, the company receives an invoice from the supplies with the credit terms 2/15, n/45. To pay the amount before the end of the discount period, Tiger would need to borrow 7% annual interest rate. How much will tiger outdoors save if it pays invoice by may 15?

Ram Corporation purchased a new truck on January 1, 2020 for $50,000. The truck is expected to...

Ram Corporation purchased a new truck on January 1, 2020 for $50,000. The truck is expected to last five years with a residual value of $10,000. Using straight-line depreciation, show the effect on the income statement and balance sheet of this transaction over the next five years. Income statement 2020 2021 2022 2023 2024 Depreciation expense $8000 $8000 $8000 $8000 $8000 Balance Sheet 2020 2021 2022 2023 2024 Equipment $ $ $ $ $ Less: accumulated Depreciation ( ) ( ) ( ) ( ) ( ) Book value $ $ $ $ $ Part II – Chapter 8 Company A Company B Company C Days sales in receivables 8.3 days 39.9 days 60.3 days Days sales in inventory 2.3...

Skysong, Inc. purchased a delivery truck for $32,400 on January 1, 2019. The truck has an...

Skysong, Inc. purchased a delivery truck for $32,400 on January 1, 2019. The truck has an expected salvage value of $2,400, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,700 in 2019 and 12,900 in 2020. Compute depreciation expense for 2019 and 2020 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method. (Round depreciable cost per unit to 2 decimal places, e.g. 0.50...

Clifford Delivery Company purchased a new delivery truck for $72,000 on April 1, 2019. The truck...

Clifford Delivery Company purchased a new delivery truck for $72,000 on April 1, 2019. The truck is expected to have a service life of 5 years or 90,000 miles and a residual value of $3,000. The truck was driven 8,000 miles in 2019 and 20,000 miles in 2020. Clifford computes depreciation expenses to the nearest whole month. Required: Compute depreciation expense for 2019 and 2020 using the following methods: (Round your answers to the nearest dollar.) Straight-line method 2019 $...

Storm Delivery Company purchased a new delivery truck for $53,400 on April 1, 2016. The truck...

Storm Delivery Company purchased a new delivery truck for $53,400 on April 1, 2016. The truck is expected to have a service life of 5 years or 150,000 miles and a residual value of $4,320. The truck was driven 8,200 miles in 2016 and 11,800 miles in 2017. Storm computes depreciation to the nearest whole month. Required: Compute depreciation expense for 2016 and 2017 using the For interim computations, carry amounts out to two decimal places. Round your final answers...

Bar Delivery Company purchased a new delivery truck for $36,000 on April 1, 2019. The truck...

Bar Delivery Company purchased a new delivery truck for $36,000 on April 1, 2019. The truck is expected to have a service life of 5 years or 120,000 miles and a residual value of $3,000. The truck was driven 10,000 miles in 2019 and 18,000 miles in 2020. Bar computes depreciation expense to the nearest whole month. Compute depreciation expense for 2019 and 2020 using the following methods: (Round your answers to the nearest dollar.) Straight-line method 2019 $ 2020...

Question