On January 1, Alamo Cranes purchased a crane for $140,000. Alamo expects the crane to remain useful for six years (1,000,000 lifts) and to have a residual value of $2,000. The company expects the crane to be used for 80,000 lifts the first year. Read the requirements LOADING... . a. Compute the first-year depreciation expense on the crane using the straight-line method. Begin by selecting the formula to calculate the company's first-year depreciation on the crane using the straight-line method. Then enter the amounts and calculate the depreciation for the first year. ( Cost - Residual value ) ÷ Useful life = Straight-line depreciation ( $140,000 - $2,000 ) ÷ 6 = $23,000 b. Compute the first-year depreciation expense on the crane using the units-of-production method. Before calculating the first-year depreciation on the crane using the units-of-production method, calculate the depreciation expense per unit. Select the formula, then enter the amounts and calculate the depreciation per unit. (Round depreciation per unit to two decimals, X.XX.) ( Cost - Residual value ) ÷ Useful life in units = Depreciation per unit ( $140,000 - $2,000 ) ÷ 1,000,000 = $0.14 Now, select the formula, enter the amounts, and calculate the company's first-year depreciation on the crane using the units-of-production method. (Round depreciation expense to the nearest whole dollar.) × = Units-of-production depreciation × =

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...

See similar textbooks

Related questions

Question

January

Alamo

Cranes purchased a crane for

$140,000.

Alamo

expects the crane to remain useful for

six

years

(1,000,000

lifts) and to have a residual value of

$2,000.

The company expects the crane to be used for

80,000

lifts the first year.

Read the

requirements

a. Compute the first-year depreciation expense on the crane using the straight-line method.

Begin by selecting the formula to calculate the company's first-year depreciation on the crane using the straight-line method. Then enter the amounts and calculate the depreciation for the first year.

(

Cost

Residual value

) ÷

Useful life

Straight-line depreciation

(

$140,000

$2,000

) ÷

$23,000

b. Compute the first-year depreciation expense on the crane using the units-of-production method.

Before calculating the first-year depreciation on the crane using the units-of-production method, calculate the depreciation expense per unit. Select the formula, then enter the amounts and calculate the depreciation per unit. (Round depreciation per unit to two decimals, X.XX.)

(

Cost

Residual value

) ÷

Useful life in units

Depreciation per unit

(

$140,000

$2,000

) ÷

1,000,000

$0.14

Now, select the formula, enter the amounts, and calculate the company's first-year depreciation on the crane using the

units-of-production method. (Round depreciation expense to the nearest whole dollar.)

	×		=	Units-of-production depreciation
	×		=

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 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