On January 1, 2018, Morrow Inc. purchased a spooler at a cost of $40,000. The equipment is expected to last five years and have a residual value of $4,000. During its five-year life. the equipment is expected to produce 250,000 units of product, In 2018-2022, 52,000, 45,000, 60,000, 52,000, and 46,000 units respectively were produced. Required: Compute depreciation expense for 2018 - 2022, and the accumulated depreciation and book value the spooler at December 31, 2018 - 2022, under the various methods: A. Straight-line B. Double-declining-balance C. Sum-of-the-years'-digits D. Units-of-production

On January 1, 2018, Morrow Inc. purchased a spooler at a cost of $40,000. The equipment is expected to last five years and have a residual value of $4,000. During its five-year life. the equipment is expected to produce 250,000 units of product, In 2018-2022, 52,000, 45,000, 60,000, 52,000, and 46,000 units respectively were produced. Required: Compute depreciation expense for 2018 - 2022, and the accumulated depreciation and book value the spooler at December 31, 2018 - 2022, under the various methods: A. Straight-line B. Double-declining-balance C. Sum-of-the-years'-digits D. Units-of-production

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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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?
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During 2019, Ryel Companys controller asked you to prepare correcting journal entries for the following three situations: 1. Machine A was purchased for 50,000 on January 1, 2014. Straight-line depreciation has been recorded for 5 years, and the Accumulated Depreciation account has a balance of 25,000. The estimated residual value remains at 5,000, but the service life is now estimated to be 1 year longer than estimated originally. 2. Machine B was purchased for 40,000 on January 1, 2017. It had an estimated residual value of 5,000 and an estimated service life of 10 years. it has been depreciated under the double-declining-balance method for 2 years. Now, at the beginning of the third year, Ryel has decided to change to the straight-line method. 3. Machine C was purchased for 20,000 on January 1, 2018, Double-declining-balance depreciation has been recorded for 1 year. The estimated residual value of the machine is 2,000 and the estimated service life is 5 years. The computation of the depreciation erroneously included the estimated residual value. Required: Prepare any necessary correcting journal entries for each situation. Also prepare the journal entry necessary for each situation to record depreciation expense for 2019.