On January 1, 2022. Novak Company purchased the following two machines for use in its production process.Machine A: The cash price of this machine was $53,500. Related expenditures also paid in cash included: sales tax $3,650,shipping costs $200, insurance during shipping $100, installation and testing costs $60, and $150 of oil andlubricants to be used with the machinery during its first year of operations. Novak estimates that the useful lifeof the machine is 5 years with a $4,400 salvage value remaining at the end of that time period. Assume that thestraight-line method of depreciation is used.Machine B:The recorded cost of this machine was $180,000. Novak estimates that the useful life of the machine is 4 yearswith a $9,500 salvage value remaining at the end of that time period.(a)Your AnswerCorrect Answer (Used) Calculate the amount of depreciation expense that Novak should record for Machine B each year of its useful life under thefollowing assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to 0decimal places, e.g. 2,125.)(1) Novak uses the straight-line method of depreciation.(2) Novak uses the declining-balance method. The rate used is twice the straight-line rate.(3)Novak uses the units-of-activity method and estimates that the useful life of the machine is 155,000 units. Actualusage is as follows: 2022, 52,500 units; 2023, 42,500 units; 2024, 32,500 units; and 2025, 27,500 units.Depreciation Expense20222023202420Straight-linemethodDeclining-balancemethodUnits-of-activitymethodTauthool, and Moin%24%24%24%24

Name: On January 1, 2022. Novak Company purchased the following two machine
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Description: On January 1, 2022. Novak Company purchased the following two machines for use in its production process.Machine A: The cash price of this machine was $53,500. Related expenditures also paid in cash included: sales tax $3,650,shipping costs $200, in

The depreciation expense is charged on fixed assets as reduction in the value of fixed assets with…

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On January 1, 2022. Novak Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $53,500. Related expenditures also paid in cash included: sales tax $3,650, shipping costs $200, insurance during shipping $100, installation and testing costs $60, and $150 of oil and lubricants to be used with the machinery during its first year of operations. Novak estimates that the useful life of the machine is 5 years with a $4,400 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. Machine B: The recorded cost of this machine was $180,000. Novak estimates that the useful life of the machine is 4 years with a $9,500 salvage value remaining at the end of that time period. (a)

On January 1, 2022. Novak Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $53,500. Related expenditures also paid in cash included: sales tax $3,650, shipping costs $200, insurance during shipping $100, installation and testing costs $60, and $150 of oil and lubricants to be used with the machinery during its first year of operations. Novak estimates that the useful life of the machine is 5 years with a $4,400 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. Machine B: The recorded cost of this machine was $180,000. Novak estimates that the useful life of the machine is 4 years with a $9,500 salvage value remaining at the end of that time period. (a)

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter8: Depreciation And Sale Of Business Property

Section: Chapter Questions

Problem 6MCQ: Which of the following is not true about the MACRS depreciation system: A salvage value must be...

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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.
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.
When depreciation is recorded each period, what account is debited? a. Depreciation Expense b. Cash c. Accumulated Depreciation d. The fixed asset account involved Use the following information for Multiple-Choice Questions 7-4 through 7-6: Cox Inc. acquired a machine for on January 1, 2019. The machine has a salvage value of $20,000 and a 5-year useful life. Cox expects the machine to run for 15,000 machine hours. The machine was actually used for 4,200 hours in 2019 and 3,450 hours in 2020.
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A machine with a 4-year estimated useful life and an estimated 15% residual value was acquired on January 1. Would depreciation expense using the sum-of-the-years-digits method be higher or lower than depreciation expense using the double-declining balance method in the first and second years:
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?
Refer to the information for Cox Inc. above. What amount would Cox record as depreciation expense for 2019 if the units-of-production method were used ( Note: Round your answer to the nearest dollar)? a. $179,400 b. $184,000 c. $218,400 d. $224,000
. Convert each of the following estimates of useful life to a straight-line depreciation rate, stated as a percentage: (a) 4 years, (b) 8 years, (c) 10 years, (d) 16 years, (e) 25 years, (f) 40 years, (g) 50 years. Equipment with a cost of $200,000 has an estimated residual value of $10,000, has an estimated useful life of 19 years, and is depreciated by the straight-line method. (a) Determine the amount of the annual depreciation. (b) Determine the book value at the end of the tenth year of use. (c) Assuming that at the start of the eleventh year the remaining life is estimated to be eight years and the residual value is estimated to be $10,500, determine the depreciation expense for each of the remaining eight years.
The following are the relevant data of two alternative machines are shown in the table below. Determine which is the better machine if T=40%, a CFAT MARR of 10%, and SL as a depreciation method. What is the depreciation per year? Note: Calculate the CFAT thru tabular method. Use AW for solving.
Consider the following data on an asset:Cost of the asset, I $38,000Useful life. N 6 YearsSalvage value. S $0 Compute the annual depreciation allowances and the resulting book values by using the DOB method and then switching to the SL method.
Lisa Miller of Basket Wonders (BW) is calculating the depreciation on a machine with a depreciable basis of $50,000, an 8-year useful life, and Scrap Value is $2,000. Please, calculate depreciation by straight line method, Sum of the year’s digit method, and Double Declining Balance (DDB) method.