Question

In: Accounting

Exercise 8-9A Computing and recording straight-line versus double-declining-balance depreciation LO 8-2, 8-3 At the beginning of...

Exercise 8-9A Computing and recording straight-line versus double-declining-balance depreciation LO 8-2, 8-3

At the beginning of Year 1, Copland Drugstore purchased a new computer system for 85,000. It is expected to have a five-year life and a $15,000 salvage value.

Required
a. Compute the depreciation for each of the five years, assuming that the company uses

(1) Straight-line depreciation. (I had 7000 as the answer but it is incorrect)

2) Double-declining-balance depreciation. (Year 4 and 5 I have incorrect)

Double-Declining
Year 1 $34,000selected answer correct
Year 2 $20,400selected answer correct
Year 3 $12,240selected answer correct
Year 4 $7,344selected answer incorrect
Year 5 $4,406selected answer incorrect

Solutions

Expert Solution

Computer cost 85000
5 year life
Salvage Value 15000
1 SLM
Dep = (Cost-Salvage value)/Useful life
= (85000-15000)/5
= 14000
Therefore, per year depreciation is 14000
2 Double declining bal
SLM perecentage 20 (85000/5)/85000*100
Double rate 40
Caln
Dep Year1 34000 (85000*.4)
Dep Year2 20400 (85000-34000)*0.4
Dep Year3 12240 (85000-34000-20400)*0.4
Dep Year4 3360 (85000-34000-20400-12240)*0.4 or [85000-15000-34000-20400-12240] whichever is lower
Dep Year5 0
70000

Please help us in giving me thumbs up. Really needed it very badly since I am need to offset some thumbs down where am at the receiving end. Please give me suggestion to improve my answer. ANd in case of doubt, I am there yo. Dont hesitate.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Exercise 8-9A Computing and recording straight-line versus double-declining-balance depreciation LO 8-2, 8-3 [The following information applies...
Exercise 8-9A Computing and recording straight-line versus double-declining-balance depreciation LO 8-2, 8-3 [The following information applies to the questions displayed below.] At the beginning of Year 1, Copland Drugstore purchased a new computer system for 85,000. It is expected to have a five-year life and a $15,000 salvage value. Exercise 8-9A Part c c. Prepare the journal entries to recognize depreciation for each of the five years, assuming that the company uses (1) Straight-line depreciation. (If no entry is required...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, Haskins Company purchases a laser cutting machine for...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, Haskins Company purchases a laser cutting machine for use in fabrication of a part for one of its key products. The machine cost $120,000, and its estimated useful life is five years, after which the expected salvage value is $7,500. Compute depreciation expense for each year of the machine's useful life under each of the following depreciation methods: Round answers to the nearest whole number, when applicable. a. Straight-line Year 1 $Answer...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, Haskins Company purchases a laser cutting machine for...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, Haskins Company purchases a laser cutting machine for use in fabrication of a part for one of its key products. The machine cost $112,000, and its estimated useful life is five years, after which the expected salvage value is $7,000. Compute depreciation expense for each year of the machine's useful life under each of the following depreciation methods: Note: Round answers to the nearest whole number, when applicable. a. Straight-line Year 1...
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 need help solving this problem thank you
1) A change from straight line depreciation to double declining balance depreciation is an example of...
1) A change from straight line depreciation to double declining balance depreciation is an example of a change in an accounting principle. (answer True or False) 2) When preparing a statement of cash flows (indirect method), a sale of equity securities is an investing activity. (answer True or False)
Exercise 8-8A Effect of double-declining-balance depreciation on financial statements LO 8-3 Golden Manufacturing Company started operations...
Exercise 8-8A Effect of double-declining-balance depreciation on financial statements LO 8-3 Golden Manufacturing Company started operations by acquiring $127,400 cash from the issue of common stock. On January 1, Year 1, the company purchased equipment that cost $127,400 cash, had an expected useful life of six years, and had an estimated salvage value of $25,480. Golden Manufacturing earned $93,720 and $67,170 of cash revenue during Year 1 and Year 2, respectively. Golden Manufacturing uses double-declining-balance depreciation. Required: Prepare income statements,...
Question 1 (1 point) Straight-Line depreciation and Double-Declining-Balance depreciation result in the same Accumulated Depreciation at...
Question 1 (1 point) Straight-Line depreciation and Double-Declining-Balance depreciation result in the same Accumulated Depreciation at the end of the asset's useful life. Question 1 options: True False Question 2 (1 point) If a company makes a journal entry to record a PP&E Impairment, the entry will cause: Question 2 options: Total Assets to Decrease Net Income to Increase Total Assets to Increase Total Liabilities to Increase Question 3 (1 point) We depreciate Land unless it contains natural resources. Question...
The method of depreciation was changed from the double-declining-balance method to the straight-line method in fiscal...
The method of depreciation was changed from the double-declining-balance method to the straight-line method in fiscal 2015. A machine was purchased on January 1, 2014 at a cost of $150,000. The machine has an estimated useful life of 10 years and a residual value of $9,000. What should have been booked as depreciation expense in fiscal 2015?
1. Identify for each of the three major methods of calculating depreciation (Straight-Line, Double Declining Balance,...
1. Identify for each of the three major methods of calculating depreciation (Straight-Line, Double Declining Balance, Units of Production), a company that would likely use that method. Why would that company choose that specific method? 2. Pick two companies within the same industry. One example would be Apple and Samsung. Find the financial statements for those companies and calculate their return on assets. Which company is performing better? What do you think is causing them to perform better?
For both problems 2&3 below use straight line and double declining balance Both methods should be...
For both problems 2&3 below use straight line and double declining balance Both methods should be applied to each problem, Find the yearly depreciation Amount and the End of year Book Value 2- Consider the following data on an asset Cost of the asset is 132,000 Useful life   5 years Salvage value 20,000 3- Consider the following data Cost of the asset $ 50,000 Useful life 7years Salvage value $50
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT