If an asset book-depreciates by the DDB method over a 10-year period, how long will it take to reach its salvage value if the estimated salvage is 20% of the first cost? Remember, assets can continue to depreciate after they have reached their salvage value.

If an asset book-depreciates by the DDB method over a 10-year period, how long will it take to reach its salvage value if the estimated salvage is 20% of the first cost? Remember, assets can continue to depreciate after they have reached their salvage value.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 3EA: Montello Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is...

See similar textbooks

Related questions

Q: Assume that you have purchased an asset for OMR 10000 and expecting the useful life of 10 years. If…

A: Depreciation is charged on as asset due to obsolescence or uses of an asset over a period of time.

Q: A machine having a certain first cost FC has a life of 10 years and a salvage value of 6% of the…

A: Let the first cost be x Salvage value (SV) = 0.06 Life (n) = 10 years BV at the end of 6th year =…

Q: If the first cost of the item is P3000, its useful life is 6 years and a salvage value of P500. What…

A: A fixed asset is a non-current that requires huge investment capital and is expected to be in…

Q: Use the MACRS to calculate the yearly depreciation allowances and book values for a firm that has…

A: Given information is: A firm that has purchased $150,000 worth of office equipment that does not…

Q: An equipment costing Php 750,000 has a life expectancy of 6 years. Using the sum-of-the–year’s digit…

A: Depreciation can be defined as the non-cash expense that has a major role in financial statements.…

Q: ZYK company makes its policy that for every new equipment purchased, the annual depreciation should…

A: SYD Stands for Sum-of-Years Digits. The sum-of-the-years' digits (SYD) method is a faster way to…

Q: Assuming an asset w/o a salvage value, what must be its estimated useful life so that the…

A: Sum of the Years Digit Method: Depreciation is calculated using the sum of the years' digits (SYD),…

Q: Consider a piece of property, plant, and equipment (PP&E) that costs $50,000, with an estimated…

A: Given that, Costs = $50,000 salvage value = $ 5,000 Estimated life = 5 years

Q: Determine its book value at the end of 8 years using: Declining balance method.

A: Under the declining balance method of depreciation, larger depreciation expense is allocated in the…

Q: Assets costing $ 24,000 are expected to be used for 10 years and have a salvage value of $ 4,000 at…

A: Depreciation refers to an accounting method used to allocate the cost of a tangible asset over its…

Q: A piece of certain equipment has the first cost of ₱90,000 and a salvage value of ₱4,500 at the end…

A: 1. Depreciation Expenses - Depreciation Expenses are the expense incurred on the wear and tear of…

Q: Determine the rate of depreciation, the total depreciation up to the end of the 8th year and the…

A: Depreciation is the reduction in the value of fixed assets due to more wear and tear, passage of…

Q: Use the appropriate function in Excel (=SLN) to calculate the annual straight-line (SL)…

A: Depreciation of Asset through Straight Line Method.

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: ected salvage value of $4,500 at the end of the depreciable life. Find the yearly depreciation, Book…

A: Matheson equation refers to the method of computing the depreciation under which the annual expense…

Q: Under MACRS, an asset which originally cost R100,000, incurred installation costs of R10,000, and…

A: Given, Meaning of Depreciation expense :- It's the asset cost which has been decreased or…

Q: An owner may calculate depreciation using the 'units of production' methods of depreciation.…

A: Depreciation per unit = (Cost of the asset - Salvage value) / Estimated production during the life =…

Q: A commercial generator with an unadjusted basis of $50,000 is straight-line depreciated over a…

Q: If an asset is book depreciated by the DDB (Double Declining Balance) method over a 5-year period,…

A: Depreciation is a method to represent the reduction in value of the asset. This is a way that is…

Q: An asset with unknown first cost value is depreciated by the straight-line method over its five year…

A: Introduction: Depreciation: Decreasing value of fixed assets over its useful life period called as…

Q: Given an asset which has an initial cost of $100,000, Useful life of 4 years and a salvage value of…

A: Straight line depreciation rate=100%Useful lifeDouble declining depreciation rate=Straight line…

Q: Assume that the equipment consists of an input device with a cost of $60,000, residual value of…

A: GIVEN DATA Assume that the equipment consists of an input device with a cost of $60,000, residual…

Q: An asset is purchased for $500,000. Salvage in 25 years is $100,000. What are the depreciation in…

A: Calculate the depreciation as per single line method as follows: Formulas:

Q: A certain equipment has a first cost of P 12,000 and a salvage value of P 500 at the end of x years.…

A: Equipment cost = P 12,000 Salvage value = P 500 Annual depreciation = P 1,437.5 Life = x

Q: Either machine is to be used for a total 10 years, then sold for the estimated salvage value. The…

A: Present worth analysis is an equivalence technique to discount a project’s future cash flows to a…

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: What is the value of an asset after 8 years of use if it depreciates from its original value of…

A: Salvage value = 120,000 x 3% = 3,600 Annual depreciation using straight line method = (Cost -…

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: If an asset is book-depreciated by the DDB method over a 5-year period, how long will it take to…

A: Salvage value is 25 percent to the first cost (FC). Time period (n) is 5.

Q: What is the value of an asset after 8 years of use if it depreciates from its original value of…

Q: A company purchases an asset for P 10,000.00 and plans to keep it for 20 ars. If the salvage value…

A: Solution: Sum of year of digit for 20 years = 1+ 2 + 3 +........+20 = 210 Useful life remains in…

Q: ZYK company makes its policy that for every new equipment purchased, the annual depreciation should…

A: When compared to other depreciation methods, double-declining-balance depreciation results in a…

Q: An automated assembly robot that cost $300,000 has a recovery period of five years with an expected…

A: Depreciation recapture- It is a tax provision that powers the IRS to collect taxes on any profitable…

Q: An existing asset that cost $16,000 twoyears ago has a market value of $12,000 today, anexpected…

A: existing asset that cost $16,000 two years ago operating cost = 4000 market value = 12000 slavage…

Q: An asset purchased for $50,000 has a depreciable life of five years, and it has a terminal book…

A: Given: Cost of asset= $50,000 Life 5 years Salvage value = $5,000

Q: Using DBM, the book value of a machine on the 4th year and 7th year are P186,706 and P48,392…

A: Manu Thanks for the Question Bartleby's Guideline: “Since you have asked multiple question, we will…

Q: Prepare a depreciation table for an asset that was bought at P150,000 and estimated to be useful for…

A: Depreciation refers to the amount that is charged on the fixed assets and by which the asset value…

Q: Determine the rate of depreciation, the total depreciation up to end of the 8th year, and the book…

A: Methods of Depreciation 1. Declining Balance Method: Under this method, a depreciation rate is fixed…

Q: A new piece of equipment, with a life of eight years, costs $12000 to purchase. The end of life…

A: A part of the cost of the asset is charged as depreciation expense every year. When depreciation…

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: An asset costing P50,000 has a life expectancy of 6 years and an estimated salvage value of P8,000.…

A: C = 50,000 S = 8,000 Life expectancy = 6 Depreciated value = D

Q: Assume that a drill press is rebuilt during its sixth year of use so that its useful life is…

A: Hi student Since there are multiple questions, we will answer only first question.

Q: A pump cost $1000 and has a salvage value of $100 after a life of 5 years. Using the straight-line…

A: Depreciation decreases the value of assets every year.

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 refers to the allocation of the assets value over the expected or the useful life of…

Q: If the total depreciation after 1 year and 2 years in an equipment are 21,255 and 35,731…

A: Under decline balance method depreciation is charges at fixed rate of depreciation on its carrying…

Question

If an asset book-depreciates by the DDB method over a 10-year period, how long will it take to reach its
salvage value if the estimated salvage is 20% of the first cost? Remember, assets can continue to
depreciate after they have reached their salvage value.

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

At the end of the expected useful life of a depreciable asset with an estimated 15% residual value, the accumulated depreciation would equal the original cost of the asset under which of the following depreciation methods?
A machine costing 350,000 has a salvage value of 15,000 and an estimated life of three years. Prepare depreciation schedules reporting the depreciation expense, accumulated depreciation, and book value of the machine for each year under the double-declining-balance and sum-of-the-years-digits methods. For the double-declining-balance method, round the depreciation rate to two decimal places.
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 $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 6â€“10 (the entry will be the same for each of the five years).
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.
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.
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 it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.
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 ten years. Montello uses the straight-line depreciation method. Calculate the annual depreciation expense.
Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation 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.
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.
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 eight years. Montello uses the straight-line depreciation method. Calculate the annual depreciation expense.