Jones Company purchased a machine for $400,000. The company expects the service life of the machine to be 5 years. During that time, it is expected that the machine's useful life will be 200,000 hours. The anticipated salvage value is $30,000. The machine was disposed of after five years of use. Actual hours used during the five years of the asset's life was: • Year 1: 50,000 hours used • Year 2: 40,000 hours used • Year 3: 35,000 hours used • Year 4: 45,000 hours used • Year 5: 30,000 hours used Prepare the 5-year depreciation schedule for the machine. Find the depreciation expense and the book value of the machine for each of the 5 years using the following depreciation methods. a. Straight Line b. Declining Balance (Double-Declining)

Jones Company purchased a machine for $400,000. The company expects the service life of the machine to be 5 years. During that time, it is expected that the machine's useful life will be 200,000 hours. The anticipated salvage value is $30,000. The machine was disposed of after five years of use. Actual hours used during the five years of the asset's life was: • Year 1: 50,000 hours used • Year 2: 40,000 hours used • Year 3: 35,000 hours used • Year 4: 45,000 hours used • Year 5: 30,000 hours used Prepare the 5-year depreciation schedule for the machine. Find the depreciation expense and the book value of the machine for each of the 5 years using the following depreciation methods. a. Straight Line b. Declining Balance (Double-Declining)

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 6PA: Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one...

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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 it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.
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.
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