Q: A depreciable property costing P2,600,000 with original scrap value of P200,000 after 15 years, ha…
A: DEPRECIATION: It is the reduction in the value of fixed assets due to its continuous use. It is…
Q: Equipment having a first cost of $158,000, a life of 10 years, and a salvage value of $23,000. What…
A: MACRS: It is a modified accelerated cost recovery system used in the United States to calculate…
Q: A certain machine has a first cost of 30,000; annual costs of 6,000; a salvage value of 4,000 and a…
A: Depreciation: It is the reduction in the value of the asset over the period. This includes normal…
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A: Cost=$28000Salvage value=25%Number of years=5yearsOperating cost=$43000
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A: The calculation of depreciation expense in year 2 under 150 declining balance method is shown…
Q: An equipment costs Php 10,000 with a salvage value of Php 500 at the end of 10 years. Calculate the…
A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…
Q: A machine costing P1,500,000.00 has an estimated economic life of 7 years. If the salvage value is…
A: The depreciation on fixed assets can be computed using various methods as straight line method,…
Q: 3. An equipment cost PHP 10,000 with salvage value of PHP 500 at the end of 10 years. Calculate the…
A: Equipment cost (Co) = PHP 10000 Salvage value (Cs) = PHP 500 n = 10 years According to straight line…
Q: The first cost of a machine is Php 1,800,000 with a salvage value of Php 400,000 at the end of its…
A: Depreciation = C × (S/C)m/n C = original cost S = scrape value n = life of property in years m =…
Q: The equipment is worth P56,000 with a salvage value of P15,000 at the end of 5 years. If the…
A: Cost of Equipment 56000 Less: Salvage value 15000 Depreciable value 41000 Estimated life 5…
Q: A machine has an initial cost of P74,777.226 and a salvage value of P8,991.127 after 7 years. What…
A: Initial cost = P 74,777.226 Salvage value = P 8991.127 Life = 7 Years Annual depreciation = (Initial…
Q: The cost of equipment is PHP 50857 and the cost of installation is PHP 35878. If the salvage value…
A: Sinking fund method of depreciation In case of sinking fund method of depreciation, a fixed…
Q: A tool is purehased for $500,000. The expected life is 25 years. The salvage value is $100,000. what…
A: Depreciation represents the reduction in the value of the asset over a useful life of the asset. It…
Q: An asset has a first cost of $12,000, an annual operating cost of $3500 and a salvage value of $5000…
A: Given information: Initial cost=$12,000 Annual cost=$3500 Salvage value=$5000 Life=7 years Interest…
Q: An asset is purchased is ten times its salvage value. Its estimated life is 10 years, after which it…
A: The depreciation expense is charged on fixed assets as reduction in the value of fixed assets with…
Q: A piece of certain equipment has the first cost of ₱90,000 and a salvage value of ₱4,500 at the end…
A: Depreciation = ( Historical cost - Salvage value)/Useful life Book value = Historical cost -…
Q: An equipment has a first cost of Php20,000 and has a salvage value of Php2,000 after 10 years. What…
A: Depreciation expense: Depreciation expense is the reduction in a particular asset due to its use or…
Q: An asset is purchased for P500,000.00. The salvage value in 25 years is P100,000.00. What is the…
A: The question is related to Depreciation. The details are given as under Cost of Asset = P500000…
Q: A machine has a first cost of P36,000 and a salvage value ofP4,000 after 8 years. Find the annual…
A: Formula: Straight line method depreciation expense = ( Asset cost - Salvage value ) / Useful life…
Q: Using the following data, solve for the depreciation and book value and prepare tabulation of book…
A: If the value of an asset gets reduced due to the normal usage in the the operation of the business,…
Q: An equipment costing P250,000 has an estimated life of 15 years with a book value of P30,000 at the…
A: The question is based on the concept of Depreciation Accounting.
Q: Electrical equipment has a first cost of $42000 and an estimated salvage value of $12000 after…
A: First we will find the depreciable asset cost to find the annual depreciation. for that, we will do…
Q: A piece of machinery costs P50,000 and has an anticipated P8,000 salvage value at the end of its…
A: Depreciation is a gradual decrease in the value of asset due to normal wear and tear, obsolescence…
Q: An asset is purchased for Php50,000. The salvage value in 25 years is Php100,00. What are the…
A: Purchase price = Php 50,000 Salvage value = Php 10,000 Life = 25 Years
Q: An equipment costing 250,000 has an estimated life of 15 years with a book value of 30,000 at the…
A: Depreciation expense: Depreciation expense is the reduction in a particular asset due to its use or…
Q: A commercial generator with an unadjusted basis of $50,000 is straight-line depreciated over a…
A:
Q: A machine has a first cost of Php 13,000.,an estimate life of 15 years, and an estimated salvage…
A: SLM is straight line method of depreciation in which same depreciation is charged every year of cost…
Q: The salvage value of the equipment is P100,000 with a service life of 10 years. The annual…
A: The question is based on the concept of Depreciation Accounting.
Q: Consider the following data on an asset: • Cost of the asset = $38,000 • Useful life = 6 years •…
A: The depreciation on an asset can be charged by using different depreciation method such as straight…
Q: An equipment has an initial cost of 20,000 and a salvage value of 5,000 after 12 years. Find the…
A: Depreciation is considered as an expense charge on the value of the Asset. It can be calculated by…
Q: A machine has an initial cost of P110,634.945 and a salvage value of P22,728.983 after 10 years.…
A: Depreciation per year = (Initial cost - Salvage value) / Useful life Depreciation per year =…
Q: The initial cost of a piece of construction equipment is P30,000,000 having a useful life of 10…
A: Sinking Fund Method: It is possible to depreciate an asset while simultaneously earning enough money…
Q: An asset costing P50,000 has a life expectancy of 6 years and an estimated salvage value of P8000.…
A: Depreciation of asset occurs due to the passing of time and usage of the asset. When a fixed rate of…
Q: Bulldozer cost P12 Million and the cost of installation labor, taxes and miscellaneous expenses is…
A: P 1 Million = P 1000000 P 12 Million = P 12000000 The Cost Of Bulldozer = P 12000000 + P500000 = P…
Q: I am using MACRS for depreciation. Purchase date: September 1st Cost: $650,000 Salvage: $30,000…
A: Depreciation: Depreciation is the reduction in the value of the asset due to factors like wear and…
Q: An equipment costing P250,000 has an estimated life of 15 years with a book value of P30,000 at the…
A: Depreciation is the reduction or allocation of cost of asset over the useful life of the asset.…
Q: use Sinking Fund Method and determine the depreciation at the 5th year.
A: Sinking fund method is a method of depreciation technique. This method helps in taking financing…
Q: If B = $400,000, n = 6 years, and S is estimated at 15% of B for a new pavement recycling machine,…
A: Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to…
Q: If an asset has a first cost of $50,000 with a $10,000 estimated salvage valueafter 5 years,…
A: Formula: Straight line depreciation = ( cost of Asset - salvage value ) / useful life years…
Q: The cost of a Range Rover is 50,000 RO with an estimated life of 8 years and the salvage value is…
A: The depreciation expense is charged on fixed assets as reduced value with the passage of time.
Q: 1. An equipment costs P100,000 with a salvage value of P5,000 at the end of 10 years. Calculate the…
A: Depreciation is referred to as the reduction in the book value of the fixed assets due to natural…
Q: The first cost of a machine is P1,800,000 with a salvage value of P300,000 at the end of its life of…
A: Rate of depreciation under declining balance method = 1useful life ×100 = 15×100 = 20% Sum of useful…
Q: A piece of machinery costs P50,000 and has an anticipated P8,000 salvage value at the end of its…
A: Depreciation Expense: Depreciation expense is the reduction in a particular asset due to its use or…
Q: If the total depreciation on year 5 is 31,164 and the book value on the same year is 120,565 and the…
A: SLM method is straight line method of depreciation, under which equal amount is being charged as…
Q: A machine costing Rm 100,000 has a life expentancy of five years and a salvage value Rm 20,000.…
A: Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life…
Q: Using a Sum of the Years'-Digits Depreciation, find the annual depreciation of a lathe machine that…
A: Cost of Asset : PHP 120,000 Salvage Value : PHP 15,000 Depreciable Base = Cost of Asset – Salvage…
Q: A machine costing RM84,000 has a life expectancy of six years and a salvage value of RM42,000.…
A: Depreciation refers to the fall in the book value of an asset each year. Depreciable amount is…
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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- Dunedin Drilling Company recently acquired a new machine at a cost of 350,000. The machine has an estimated useful life of four years or 100,000 hours, and a salvage value of 30,000. This machine will be used 30,000 hours during Year 1, 20,000 hours in Year 2, 40,000 hours in Year 3, and 10,000 hours in Year 4. With DEPREC5 still on the screen, click the Chart sheet tab. This chart shows the accumulated depreciation under all three depreciation methods. Identify below the depreciation method that each represents. Series 1 _____________________ Series 2 _____________________ Series 3 _____________________ When the assignment is complete, close the file without saving it again. Worksheet. The problem thus far has assumed that assets are depreciated a full year in the year acquired. Normally, depreciation begins in the month acquired. For example, an asset acquired at the beginning of April is depreciated for only nine months in the year of acquisition. Modify the DEPREC2 worksheet to include the month of acquisition as an additional item of input. To demonstrate proper handling of this factor on the depreciation schedule, modify the formulas for the first two years. Some of the formulas may not actually need to be revised. Do not modify the formulas for Years 3 through 8 and ignore the numbers shown in those years. Some will be incorrect as will be some of the totals. Preview the printout to make sure that the worksheet will print neatly on one page, and then print the worksheet. Save the completed file as DEPRECT. Hint: Insert the month in row 6 of the Data Section specifying the month by a number (e.g., April is the fourth month of the year). Redo the formulas for Years 1 and 2. For the units of production method, assume no change in the estimated hours for both years. Chart. Using the DEPREC5 file, prepare a line chart or XY chart that plots annual depreciation expense under all three depreciation methods. No Chart Data Table is needed; use the range B29 to E36 on the worksheet as a basis for preparing the chart if you prepare an XY chart. Use C29 to E36 if you prepare a line chart. Enter your name somewhere on the chart. Save the file again as DEPREC5. Print the chart.Dunedin Drilling Company recently acquired a new machine at a cost of 350,000. The machine has an estimated useful life of four years or 100,000 hours, and a salvage value of 30,000. This machine will be used 30,000 hours during Year 1, 20,000 hours in Year 2, 40,000 hours in Year 3, and 10,000 hours in Year 4. Dunedin buys equipment frequently and wants to print a depreciation schedule for each assets life. Review the worksheet called DEPREC that follows these requirements. Since some assets acquired are depreciated by straight-line, others by units of production, and others by double-declining balance, DEPREC shows all three methods. You are to use this worksheet to prepare depreciation schedules for the new machine.Average rate of returncost savings Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of 125,000 with a 15,000 residual value and an eight-year life. The equipment will replace one employee who has an average wage of 28,000 per year. In addition, the equipment will have operating and energy costs of 5,150 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment.
- Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.IMPACT OF IMPROVEMENTS AND REPLACEMENTS ON THE CALCULATION OF DEPRECIATION On January 1, 20-1, Dans Demolition purchased two jackhammers for 2,500 each with a salvage value of 100 each and estimated useful lives of four years. On January 1, 20-2, a stronger blade to improve performance was installed in Jackhammer A for 800 cash and the compressor was replaced in Jackhammer B for 200 cash. The compressor is expected to extend the life of Jackhammer B one year beyond the original estimate. REQUIRED 1. Using the straight-line method, prepare general journal entries for depreciation on December 31, 20-1, for Jackhammers A and B. 2. Enter the transactions for January 20-2 in a general journal. 3. Assuming no other additions, improvements, or replacements, calculate the depreciation expense for each jackhammer for 20-2 through 20-4.IMPACT OF IMPROVEMENTS AND REPLACEMENTS ON THE CALCULATION OF DEPRECIATION On January 1, 20-1, two flight simulators were purchased by a space camp for 77,000 each with a salvage value of 5,000 each and estimated useful lives of eight years. On January 1, 20-2, the hydraulic system for Simulator A was replaced for 6,000 cash and an updated computer for more advanced students was installed in Simulator B for 9,000 cash. The hydraulic system is expected to extend the life of Simulator A three years beyond the original estimate. REQUIRED 1. Using the straight-line method, prepare general journal entries for depreciation on December 31, 20-1, for Simulators A and B. 2. Enter the transactions for January 20-2 in a general journal. 3. Assuming no other additions, improvements, or replacements, calculate the depreciation expense for each simulator for 20-2 through 20-8.
- Use the information in Problem A-1 to solve this problem. Assume the delivery van is expected to have a useful life of 100,000 miles (Year 1, 40,000 miles; Year 2, 30,000 miles; Year 3, 20,000 miles; Year 4, 10,000 miles). Required Prepare a schedule of depreciation using the units-of-production method. Check Figure Year 3 depreciation, 3,200 PROBLEM A-1 A delivery van was bought for 18,000. The estimated life of the van is four years. The trade-in value at the end of four years is estimated to be 2,000.Newmarge Products Inc. is evaluating a new design for one of its manufacturing processes. The new design will eliminate the production of a toxic solid residue. The initial cost of the system is estimated at 860,000 and includes computerized equipment, software, and installation. There is no expected salvage value. The new system has a useful life of 8 years and is projected to produce cash operating savings of 225,000 per year over the old system (reducing labor costs and costs of processing and disposing of toxic waste). The cost of capital is 16%. Required: 1. Compute the NPV of the new system. 2. One year after implementation, the internal audit staff noted the following about the new system: (1) the cost of acquiring the system was 60,000 more than expected due to higher installation costs, and (2) the annual cost savings were 20,000 less than expected because more labor cost was needed than anticipated. Using the changes in expected costs and benefits, compute the NPV as if this information had been available one year ago. Did the company make the right decision? 3. CONCEPTUAL CONNECTION Upon reporting the results mentioned in the postaudit, the marketing manager responded in a memo to the internal audit department indicating that cash inflows also had increased by a net of 60,000 per year because of increased purchases by environmentally sensitive customers. Describe the effect that this has on the analysis in Requirement 2. 4. CONCEPTUAL CONNECTION Why is a postaudit beneficial to a firm?MODIFIED ACCELERATED COST RECOVERY SYSTEM Using the information given in Exercise 5Apx-1B and the rates shown in Figure 5A-4, prepare a depreciation schedule showing the depreciation expense, accumulated depreciation, and book value for each year under the Modified Accelerated Cost Recovery System. For tax purposes, assume that the computer has a useful life of five years. (The IRS schedule will spread depreciation over six years.)
- Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one million tons of ore within the mine. Gimli paid $23,100,000 for the rights and expects to harvest the ore over the next ten years. The following is the expected extraction for the next five years. Year 1: 50,000 tons Year 2: 90,000 tons Year 3: 100,000 tons Year 4: 110,000 tons Year 5: 130,000 tons Calculate the depletion expense for the next five years, and create the journal entry for year one.Depreciation Jensen Inc., a graphic arts studio, is considering the purchase of computer equipment and software for a total cost of $18,000. Jensen can pay for the equipment and software over three years at the rate of $6,000 per year. The equipment is expected to last 10 to 20 years, but because of changing technology, Jensen believes it may need to replace the system in as soon as three to five years. A three-year lease of similar equipment and software is available for $6,000 per year. Jensens accountant has asked you to recommend whether the company should purchase or lease the equipment and software and to suggest the length of time over which to depreciate the software and equipment if the company makes the purchase. Required Ignoring the effect of taxes, would you recommend the purchase or the lease? Why or why not? Referring to the definition of depreciation, what appropriate useful life should be used for the equipment and software?REPLACEMENT ANALYSIS St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one that will increase earnings before depreciation from 24,000 to 46,000 per year. The new machine will cost 80,000; and it will have an estimated life of 8 years and no salvage value. The new machine will be depreciated over its 5-year MACRS recovery period, so the applicable depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%. The applicable corporate tax rate is 40%, and the firm's WACC is 10%. The old machine has been fully depreciated and has no salvage value. Should the old riveting machine be replaced by the new one? Explain your answer.