Depreciation Choices and Outcome. Mulligan Co. purchased a new machine on January 1. The following information pertains to the purchase: 5 years $6,000 36,000 Sales tax 2,000 Freight cost 1,600 Electrical set-up 1,400 Custom programming 1,000 Estimated annual labor savings 7,000 Additional revenue generated 16,000 Life of asset Salvage value Purchase price a. Determine the capitalized cost of the new machine $ b. Compute annual depreciation, accumulated depreciation and the machine's book value for the first three year assuming: i. Straight-line depreciation ii. Double-declining-balance method Year 1 Year 2 Year 3 Straight-Line Depreciation Double-Declining Balance Depreciation Accumulated Book Value at Depreciation Accumulated Book Value at Expense Depreciation Year-end Expense Depreciation Year-End $ $ c. Assume the machine is sold for $16,000 at the end of the third year after depreciation has been calculated. Determine the gain or loss assuming: i. Straight-line depreciation ii. Double-declining balance method

Depreciation Choices and Outcome. Mulligan Co. purchased a new machine on January 1. The following information pertains to the purchase: 5 years $6,000 36,000 Sales tax 2,000 Freight cost 1,600 Electrical set-up 1,400 Custom programming 1,000 Estimated annual labor savings 7,000 Additional revenue generated 16,000 Life of asset Salvage value Purchase price a. Determine the capitalized cost of the new machine $ b. Compute annual depreciation, accumulated depreciation and the machine's book value for the first three year assuming: i. Straight-line depreciation ii. Double-declining-balance method Year 1 Year 2 Year 3 Straight-Line Depreciation Double-Declining Balance Depreciation Accumulated Book Value at Depreciation Accumulated Book Value at Expense Depreciation Year-end Expense Depreciation Year-End $ $ c. Assume the machine is sold for $16,000 at the end of the third year after depreciation has been calculated. Determine the gain or loss assuming: i. Straight-line depreciation ii. Double-declining balance method

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 15PB: Urquhart Global purchases a building to house its administrative offices for $500,000. The best...

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