Group Activity3. Spin Co. acquired a machine on January 1, 2021 for P500,000. The machinewas estimated to have a useful life of 4 years and a residual value equal to 10%of the cost.Required: Prepare the depreciation table under each of the followingdepreciation methods:a. Straight line methodb. Sum-of-the-years' digits methodc. Double declining balance method4. Use the information in No. 3 except that the machine was estimated to have atotal service life of 12,000 hours and a total productive capacity of 360,000units of a product. Information on actual usage and production in the first twoyears is as follows:YearManufacturing hoursUnits produced20213,600120,00020223,000100,000Required: Prepare the journal entries on Dec. 31, 2021 and Dec. 31, 2022 usingthe units of production method wherein the depreciation rate is determined:a. based on inputb. based on output

Name: Group Activity3. Spin Co. acquired a machine on January 1, 2021 for P
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Description: Group Activity3. Spin Co. acquired a machine on January 1, 2021 for P500,000. The machinewas estimated to have a useful life of 4 years and a residual value equal to 10%of the cost.Required: Prepare the depreciation table under each of the following

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3. Spin Co. acquired a machine on January 1, 2021 for P500,000. The machine was estimated to have a useful life of 4 years and a residual value equal to 10% of the cost. Required: Prepare the depreciation table under each of the following depreciation methods: a. Straight line method b. Sum-of-the-years' digits method c. Double declining balance method

3. Spin Co. acquired a machine on January 1, 2021 for P500,000. The machine was estimated to have a useful life of 4 years and a residual value equal to 10% of the cost. Required: Prepare the depreciation table under each of the following depreciation methods: a. Straight line method b. Sum-of-the-years' digits method c. Double declining balance method

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 8P: Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of...

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On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was estimated at 2,000. The equipment will be depreciated over 10 years using the double-declining balance method. Counting the year of acquisition as one-half year, Mundo should record 2019 depredation expense of: a. 7,680 b. 9,000 c. 9,600 d. 10,000
On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.
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Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for 1,500 each. The company uses group depreciation on a straight-line basis. Required: 1. Prepare journal entries to record the acquisition and the first years depreciation expense. 2. If one of the cars is sold at the beginning of the second year for 7,000, what journal entry is required?
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Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated life: 5 years Estimated residual value: 3,000 Depreciation method for financial statements: straight-line method Depreciation for income tax purposes: MACRS (3-year life) From 2019 through 2023, each year, Hunter had sales of 100,000, cost of goods sold of 60,000, and operating expenses (excluding depreciation) of 15,000. The truck was disposed of on December 31, 2023, for 2,000. Required: 1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2019 through 2023. 2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2019 through 2023. 3. Compare the total income for all 5 years under Requirements 1 and 2.
Akron Incorporated purchased an asset at the beginning of Year 1 for 375,000. The estimated residual value is 15,000. Akron estimates that the asset has a service life of 5 years. Calculate the depreciation expense using the sum-of-the-years-digits method for Years 1 and 2 of the assets life.