Q/ A contractor bought a construction mechanism at a price of $80,000. Records indicate that the useful life of a similar mechanism is 6 years, that it has a value of rubble of $10,000 at the end of its economic life, and that the annual compound interest rate is 10%. Required: Calculating the annual premium for depreciation, accumulated depreciation and the book value at the end of each year of the machine's life Using the following methods: 1- The straight line method. 2- Fixed ratio method. 3- The method of collecting the numbers of the years. 4- The method of declining capital. Note: A table is made for each method separately because the requirements are for all years and not for one year

Q/ A contractor bought a construction mechanism at a price of $80,000. Records indicate that the useful life of a similar mechanism is 6 years, that it has a value of rubble of $10,000 at the end of its economic life, and that the annual compound interest rate is 10%. Required: Calculating the annual premium for depreciation, accumulated depreciation and the book value at the end of each year of the machine's life Using the following methods: 1- The straight line method. 2- Fixed ratio method. 3- The method of collecting the numbers of the years. 4- The method of declining capital. Note: A table is made for each method separately because the requirements are for all years and not for one year

Name: Q/ A contractor bought a construction mechanism at a price of $80,000
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Description: Q/ A contractor bought a construction mechanism at a price of $80,000. Records indicate that the useful life of a similar mechanism is6 years, that it has a value of rubble of $10,000 at the end of its economic life, and that the annual compound int

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter18: Accounting For Long-term Assets

Section: Chapter Questions

Problem 3CE: A machine costing 350,000 has a salvage value of 15,000 and an estimated life of three years....

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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 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.
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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. Dunedin buys equipment frequently and wants to print a depreciation schedule for each assets life. Review the worksheet called DEPREC that follows these requirements. Since some assets acquired are depreciated by straight-line, others by units of production, and others by double-declining balance, DEPREC shows all three methods. You are to use this worksheet to prepare depreciation schedules for the new machine.