Question

In: Accounting

Meek Corporation acquires a building at $32,000 for an estimated useful life of 20 years. Meek...

Meek Corporation acquires a building at $32,000 for an estimated useful life of 20 years. Meek estimates the building will have $12,000 residual value at the end of 20 years. Meek uses double declining balance method for depreciation. What's the depreciation expense at the end of second year? *

$1,680

$3,000

$2,880

$1,500

Solutions

Expert Solution

Correct Option C i.e. $2,880
Calculation of depreciation by double declining balance method
Annual Depreciation by SLM = (32000 - 12000)/ 20
                                                    =1000
SLM Depretiation Rate = 1000/(32000 - 12000)*100
                                         =5%
Depreciation rate for Double Declining balance method = 5%*2 i.e. 10%
Year Opening Carrying Value Depreciation Expense Accumulated Depreciation Carrying Value
Year 0 32000
Year 1 32000 3200 3200 28800
Year 2 28800 2880 6080 25920

Related Solutions

a) A Company purchased equipment for RO 50,000 with an estimated useful life of 20 years....
a) A Company purchased equipment for RO 50,000 with an estimated useful life of 20 years. At the end of the 10 year, company determined that the equipment would last only 5 more years. Does this revision affect depreciation calculated previously? Yes or no, justify your answer. b) You are required to calculate the rate of depreciation and the depreciation to be charged at the end of each year by using reducing balance method for 4 years. Life of the...
A building acquired at the beginning of the year at a cost of $1,450,000 has an estimated residual value of $300,000 and an estimated useful life of 10 years.
A building acquired at the beginning of the year at a cost of $1,450,000 has an estimated residual value of $300,000 and an estimated useful life of 10 years.Determine (a ) the depreciable cost (b)the straight line  rate (c) the annual straight line depreciation
Cross Corporation purchases three assets: Machine for $500,000 with useful life of 4 years Building for...
Cross Corporation purchases three assets: Machine for $500,000 with useful life of 4 years Building for $1,500,000 with useful life of 30 years Patent for $250,000 with useful life of 20 years It sells the machine for $100,000 after three years. Fill out the following blanks in the table below: Machine Building Patent Depreciation or amortization method Double declining balance; no salvage value Straight-line; salvage value of $300,000 Amortization (straight-line) Depreciation or amortization expense in year 1 Net book value...
A new machine costs $120,000, has an estimated useful life of five years and an estimated...
A new machine costs $120,000, has an estimated useful life of five years and an estimated salvage value of $15,000 at the end of that time. It is expected that the machine can produce 210,000 widgets during its useful life. The New Times Company purchases this machine on January 1, 2017, and uses it for exactly three years. During these years the annual production of widgets has been 80,000, 50,000, and 30,000 units, respectively. On January 1, 2020, the machine...
A new van costs $25,000, has an estimated useful life of five years and an estimated...
A new van costs $25,000, has an estimated useful life of five years and an estimated salvage value of $5,000 at the end of that time. It is expected that the van will be driven 100,000 miles during its useful or service life. The Nation Express Company purchases this van on April 1, 2019. During 2019 the van is driven 13,000 miles and during 2020 it was driven 21,000 miles. On January 1, 2021, the van is sold for $7,000....
1. A building was purchased for $240,000 and has a useful life of 30 years, and...
1. A building was purchased for $240,000 and has a useful life of 30 years, and a residual value of $90,000. After it has been used 5 years, its accumulated depreciation using the straight-line method would be a. $12,500 b. $50,000 c. $25,000 d. $40,000 2. Massachusetts Mining Company purchased a gravel pit for $2,500,000. It is estimated that 5 million tons of gravel can be extracted over the pit's useful life, with a residual value of $700,000. If 4...
A grader has an initial cost of $220,000 and an estimated useful life of 10 years....
A grader has an initial cost of $220,000 and an estimated useful life of 10 years. The salvage value after 10 years of use is estimated to be $25,000. What is the annual depreciation amount in the fourth year if the sum-of-the-years method of depreciation accounting is used? Select one: a. $19,500.00 b. $24,818.18 c. $28,363.64 d. $99,454.55
Your Company purchased a machine with an estimated useful life of 8 years. The machine will...
Your Company purchased a machine with an estimated useful life of 8 years. The machine will generate cash inflows of $96,000 each year. The salvage value at the end of the project is $80,000. Your Company's discount rate is 6%. The net present value of the investment is ($7,500). What is the purchase price of the machine?
Needed Information: -The equipment has an estimated useful life of 13 years. -There is no purchase...
Needed Information: -The equipment has an estimated useful life of 13 years. -There is no purchase option. Transfer of ownership to Michael is not stipulated in the lease contract. -The fair value to Thomas (lessor) at the inception of the lease was $4,000,000. Lessor's cost was $3,775,000. Sales commissions were $2,500. -Michael's incremental borrowing rate is 10%. The implicit annual rate in the lease (known to Michael) is 8%. - Michael and Thomas use straight-line depreciation. -The lease requires rental...
The project has a useful life of 10 years. Land costs $5m and is estimated to...
The project has a useful life of 10 years. Land costs $5m and is estimated to have a resale value of $7m at the completion of the project. Buildings cost $4m, with allowable depreciation of 5% pa straight-line and a salvage value of $0.8m. Equipment costs $3m, with allowable depreciation of 20% pa straight-line and a salvage value of $0.4m. An investment allowance of 20% of the equipment cost is available. Revenues are expected to be $5m in year one...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT