Explain why fixed assets are depreciated.
Q: A machine, purchased for$50,000, has a depreciable life of five years. It will have an expected…
A:
Q: A new CNC machine has an installed with a cost basis of $35,000 and an estimated service life of…
A: Given: Cost of asset = $35,000 Life = 7 years
Q: Goodson Healthcare purchased a new sonogram imaging unit for $300,000 and a truck body and chassis…
A: Answer a) Calculation of Salvage Value Salvage Value = (Purchase price of Imaging Unit + Purchase…
Q: A company purchased a van at a cost of $42,000 and expects its salvage value to be $6,000 after…
A: The depreciation is a decline in the value of tangible assets over their useful life. it is a…
Q: The cost of an asset is $1,050,000, and its residual value is $280,000. Estimated useful life of the…
A: Formula: Depreciation rate = ( 100 / Useful life ) x 2
Q: The equipment has a delivered cost of $58,000. An additional $4,000 is required to install the new…
A:
Q: The price of a utility vehicle purchased by Knox Industries was $21,300. Its salvage value after…
A: Depreciation: Decreasing the value of fixed assets over its useful life period.
Q: The cost of an asset is $1,070,000, and its residual value is $220,000. Estimated useful life of the…
A: GIVEN The cost of an asset is $1,070,000, and its residual value is $220,000. Estimated useful…
Q: Stahmann Products paid $380,000 for a numerical controller and had it installed at a cost of…
A: Given: Purchase cost =$380000Installation cost =$50000Recovery period =7 yearssalvage value =10% of…
Q: A company that makes micro motion compact coriolis meters purchased a new packaging system for…
A: Replacement study consider most recent data. The total annual benefit on new system can be…
Q: A Caterpillar tractor acquired on January 12 at a cost of $216,000 has an estimated useful life of…
A: Straight line method of depreciation: This is one of the methods to calculate the depreciation on…
Q: Pollyanna Publishing, a textbook publishing firm, purchased a new machine for $80,000. This machine…
A: Depreciation Rate for Double-Declining-Balance Method = Straight-Line Method Rate x 2 = (100 /…
Q: A high-precision programmable router for shaping furniture components is purchased by Henredon for…
A: Under declining balance method, the depreciation is charged on the book value of the assets.
Q: If 40,000 units were produced in 20X1 and 60,000 were produced in 20X2, what amount of accumulated…
A: The correct option is C. $150,000
Q: The company purchased a computer system at a cost of $100,000. The estimated useful life is 4 years,…
A: Double declining depreciation rate = Straight line depreciation rate x 180% Depreciation expense for…
Q: A small truck is purchased for $17,000. The truck is expected to be of use to the company for 6…
A: Double Declining Balance Depreciation Method also is known as DDB depreciation, is the second…
Q: A new barcode reading device has an installed cost basis of $22,820 and an estimated service life of…
A: The declining balance method is the method of calculating depreciation where higher depreciation is…
Q: Solar power is to be installed to handle a large portion of a company's electrical load. Even though…
A: Depreciation refers to allocation the cost to physical asset over its expected life of asset and in…
Q: Liquior Company has an equipment costing P700,000 with an estimated residual value of P70,000 and an…
A: Depreciation: Depreciation means the reduction in the value of an asset over the useful life of the…
Q: Kulot Company has an equipment costing $700,000 with an estimated residual value of $70,000 and an…
A: Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life…
Q: determine book value at the end of 3rd year, accrued depreciation at the end of 2nd year and annual…
A: Accrued depreciation at end of 3rd year: =(Cost- Salvage)x [(1+i%)3 -1]/[(1+i)5 -1] here i =…
Q: The cost of an asset is $1,050,000, and its residual value is $280,000. Estimated useful life of the…
A: Depreciation means the amount expense out of cost of assets due to normal usage of assets , normal…
Q: A machine purchased three years ago for $311,000 has a current book value using straight-line…
A: Machinery costs can be classified into two domains Annual ownership costs Operating Costs Annual…
Q: A new barcode reading device has an installed cost basis of $23,790 and an estimated service life of…
A: The depreciation expense is charged on fixed assets as reduction in the value of fixed assets with…
Q: A machine purchased three years ago for $313,000 has a current book value using straight-line…
A: Solution: Particulars Keep Old Machine Purchase New machine Operating Expenses $320,000.00…
Q: LLED has purchased a new chip making machine for $1,500,000 with a salvage value of $100,000 in 10…
A: Straight-line depreciation per year=Cost of asset-Salvage valueUseful life
Q: A new barcode reading device has an installed cost basis of $20,670and an estimated service life of…
A: Double declining balance method is a method which is used to determine the value of depreciation…
Q: Given a cost of a depreciable fixed asset of $24,000 with a salvage value of $2,000 and a life of 5…
A: 1. Given a cost of a depreciable fixed asset of $24,000 with a salvage value of $2,000 and a life of…
Q: A machine purchased three years ago for $313,000 has a current book value using straight-line…
A: Keep old machine Purchase new Machine Annual Operating expense $32000 $9000 x No. of years 10…
Q: An Americana Airway jet costs $42,000,000 and is expected to fly 350,000,000 miles during its 8-year…
A: Business organizations are required to charge the depreciation expense in their accounting books so…
Q: A machine equipment has an initial purchase price of 20000 TL, an estimated scrap value of 2000 TL…
A: Depreciable cost=Initial purchase price-Scrap value=20,000-2,000=18,000
Q: A construction company is considering changing its depreciation from the MACRS method to the…
A: Depreciation refers to an accounting method or system of allocating the cost of a tangible or…
Q: A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estimated life of…
A: Double declining method of depreciation is that method in which depreciation is charged with double…
Q: A building with a cost of $900,000 has an estimated residual value of $360,000, has an estimated…
A: a. Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected…
Q: A Your company has purchased a large new tractor trailer truck (heavy-duty truck). It has a basic…
A: As per the honor code, we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit…
Q: Three years ago, Witt Gas Controls purchased equipment for $80,000 that was expected to have a…
A: a. The computation is done below: The formulation for computing the above values as follows:
Q: The “Big-Deal” Company has purchased new furniture for their offices at a retail price of $125,000.…
A: The numerical has covered the concept of Depreciation Accounting.
Q: kelly’s Fitness Center purchased a new step machine for $16,500. The apparatus is expected to last…
A:
Q: Calculate depreciation for the second year using the double-declining-balance method of…
A:
Q: A truck with a cost of $80,000 has an estimated residual value of $15,000, has an estimated useful…
A: Introduction: Depreciation: Decreasing value of fixed assets over its useful life period called as…
Q: A factory has decided to purchase some new equipment for P650, 000. The equipment will be kept for…
A: Allocating the cost of assets equally throughout the life of the asset is known as the straight-line…
Q: A machine purchased three years ago for $309,000 has a current book value using straight-line…
A: First of all, the cost of old machinery is sunk cost and no more relevant for our calculations. The…
Q: A building with a cost of $1,200,000 has an estimated residual value of $250,000, has an estimated…
A: a. Calculate the amount of annual deprecation.
Q: If a new machine is purchased for OMR 250,000 that has a useful life of 5 years with no residual…
A: Annual depreciation=Purchase valueUseful life=OMR 250,0005=OMR 50,000
Q: Anne Company has an equipment costing P700,000 with an estimated residual value of P70,000 and an…
A: The Accumulated depreciation is calculated as sum of Depreciation expense for past years. The book…
Q: A factory has decided to purchase some new équipment for P650, 000. The equipment will be kept for…
A: The depreciation expense is charged on fixed assets as reduced value of the fixed asset with usage…
- Explain why fixed assets are
depreciated.
- A patent is purchased at a cost of $100,000, and the buyer expects the useful life to be 20 years. What is the
adjusting entry needed at year-end?
- What is the reasoning of using the declining balance method?
- A delivery truck that costs $40,000 has a residual value of $8,000 and a useful life of 160,000 miles and the truck was driven 20,000 miles that year. Calculate the first year’s depreciation. What is the book value of the truck at the end of the first year?
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- 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.Utica Machinery Company purchases an asset for 1,200,000. After the machine has been used for 25,000 hours, the company expects to sell the asset for 150,000. What is the depreciation rate per hour based on activity?Montello Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for 120,000 miles. Montello uses the units-of-production depreciation method and in year one it expects to use the truck for 23,000 miles. Calculate the annual depreciation expense.
- Urquhart Global purchases a building to house its administrative offices for $500,000. The best estimate of the salvage value at the time of purchase was $45,000, and it is expected to be used for forty years. Urquhart uses the straight-line depreciation method for all buildings. After ten years of recording depreciation, Urquhart determines that the building will be useful for a total of fifty years instead of forty. Calculate annual depreciation expense for the first ten years. Determine the depreciation expense for the final forty years of the assets life, and create the journal entry for year eleven.Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value at the time of purchase was $15,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. Calculate annual depreciation expense for the first four years. Determine the depreciation expense for the final fifteen years of the assets life, and create the journal entry for year five.Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for eight years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After three years of recording depreciation, Montezuma determines that the delivery truck will only be useful for another three years and that the salvage value will increase to $4,000. Determine the depreciation expense for the final three years of the assets life, and create the journal entry for year four.
- Montezuma Inc. purchases a delivery truck for $20,000. The truck has a salvage value of $8,000 and is expected to be driven for ten years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After five years of recording depreciation, Montezuma determines that the delivery truck will be useful for another five years (ten years in total, as originally expected) and that the salvage value will increase to $10,000. Determine the depreciation expense for the final five years of the assets life, and create the journal entry for years 6–10 (the entry will be the same for each of the five years).Hathaway Company purchased a copying machine for 8,700 on October 1, 2019. The machines residual value was 500 and its expected service life was 5 years. Hathaway computes depreciation expense to the nearest whole month. Required: 1. Compute depredation expense (rounded to the nearest dollar) for 2019 and 2020 using the: a. straight-line method b. sum-of-the-years-digits method c. double-declining-balance method 2. Next Level Which method produces the highest book value at the end of 2020? 3. Next Level Which method produces the highest charge to income in 2020? 4. Next Level Over the life of the asset, which method produces the greatest amount of depreciation expense?For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a ten-year remaining legal life was purchased for $300,000. The patent will be usable for another eight years. B. A patent was acquired on a new smartphone. The cost of the patent itself was only $24,000, but the market value of the patent is $600,000. The company expects to be able to use this patent for all twenty years of its life.
- 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.To test your formulas, assume the machine purchased had an estimated useful life of three years (20,000, 30,000, and 50,000 hours, respectively). Enter the new information in the Data Section of the worksheet. Does your depreciation total 320,000 under all three methods? There are three common errors made by students completing this worksheet. Lets clear up two of them. One, an asset that has a three-year life should have no depreciation claimed in Year 4. This can be corrected using an =IF statement in Year 4. For example, the correct formula in cell C32 is =IF(B32D9,0,(D7D8)/D9) or =IF(B32D9, 0, SLN(D7, D8, D9)). You may wish to edit what you have already entered rather than retype it. Two, as mentioned in requirement 2, the double-declining-balance calculation needs to be modified in the last year of the assets life. Assuming you have already modified the formula for Year 4 (per instructions in step 2), alter the formula for Year 3 also. If you corrected any formulas, test their correctness by trying different estimated useful lives (between 3 and 8) in cell E9. Then reset the Data Section to the original values, save the revised file as DEPREC2, and reprint the worksheet to show the correct formulas. The third common error doesnt need to be corrected in this problem. The general form of the double-declining-balance formula needs to be modified to check the net book value of the asset each year to make sure it does not go below salvage value. =DDB does this automatically, but if you are writing your own formulas, this gets very complicated and is beyond the scope of the problem.
