Q2- The Hartley Company purchased a new surgical laser for $90,000. The estimated salvage value is $5,000. The laser has a useful life of five years and the clinic expects to use it 10,000 hours. It was used 1,600 hours in year 1; 2,200 hours in year 2; 2,400 hours in year 3; 1,800 hours in year 4; 2,000 hours in year 5. Instructions (a) Compute and prepare depreciation schedule for each of the five years under each of the following methods: (1) straight-line. (2) units-of-activity.

Q2- The Hartley Company purchased a new surgical laser for $90,000. The estimated salvage value is $5,000. The laser has a useful life of five years and the clinic expects to use it 10,000 hours. It was used 1,600 hours in year 1; 2,200 hours in year 2; 2,400 hours in year 3; 1,800 hours in year 4; 2,000 hours in year 5. Instructions (a) Compute and prepare depreciation schedule for each of the five years under each of the following methods: (1) straight-line. (2) units-of-activity.

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter9: Long-term Assets: Fixed And Intangible

Section: Chapter Questions

Problem 3TIF: Communication Godwin Co. owns three delivery trucks. Details for each truck at the end of the most...

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St. Johns Medical Center (SJMC) has five medical technicians who are responsible for conducting cardiac catheterization testing in SJMCs Cath Lab. Each technician is paid a salary of 36,000 and is capable of conducting 1,000 procedures per year. The cardiac catheterization equipment is one year old and was purchased for 250,000. It is expected to last five years. The equipments capacity is 25,000 procedures over its life. Depreciation is computed on a straight-line basis, with no salvage value expected. The reading of the catheterization results is conducted by an outside physician whose fee is 120 per test. The technicians report with the outside physicians note of results is sent to the referring physician. In addition to the salaries and equipment, SJMC spends 50,000 for supplies and other costs needed to operate the equipment (assuming 5,000 procedures are conducted). When SJMC purchased the equipment, it fully expected to perform 5,000 procedures per year. In fact, during its first year of operation, 5,000 procedures were run. However, a larger hospital has established a clinic in the city and will siphon off some of SJMCs business. During the coming years, SJMC expects to run only 4,200 cath procedures yearly. SJMC has been charging 850 for the procedureenough to cover the direct costs of the procedure plus an assignment of general overhead (e.g., depreciation on the hospital building, lighting and heating, and janitorial services). At the beginning of the second year, an HMO from a neighboring community approached SJMC and offered to send its clients to SJMC for cardiac catheterization provided that the charge per procedure would be 550. The HMO estimates that it can provide about 500 patients per year. The HMO has indicated that the arrangement is temporaryfor one year only. The HMO expects to have its own testing capabilities within one year. Required: 1. Classify the resources associated with the cardiac catheterization activity into one of the following: (1) committed resources, or (2) flexible resources. 2. Calculate the activity rate for the cardiac catheterization activity. Break the activity rate into fixed and variable components. Now, classify each activity resource as relevant or irrelevant with respect to the following alternatives: (1) accept the HMO offer, or (2) reject the HMO offer. Explain your reasoning. 3. Assume that SJMC will accept the HMO offer if it reduces the hospitals operating costs. Should the HMO offer be accepted? 4. Jerold Bosserman, SJMCs hospital controller, argued against accepting the HMOs offer. Instead, he argued that the hospital should be increasing the charge per procedure rather than accepting business that doesnt even cover full costs. He also was concerned about local physician reaction if word got out that the HMO was receiving procedures for 550. Discuss the merits of Jerolds position. Include in your discussion an assessment of the price increase that would be needed if the objective is to maintain total revenues from cardiac catheterizations experienced in the first year of operation. 5. Chandra Denton, SJMCs administrator, has been informed that one of the Cath Lab technicians is leaving for an opportunity at a larger hospital. She met with the other technicians, and they agreed to increase their hours to pick up the slack so that SJMC wont need to hire another technician. By working a couple hours extra every week, each remaining technician can perform 1,050 procedures per year. They agreed to do this for an increase in salary of 2,000 per year. How does this outcome affect the analysis of the HMO offer? 6. Assuming that SJMC wants to bring in the same revenues earned in the cardiac catheterization activitys first year less the reduction in resource spending attributable to using only four technicians, how much must SJMC charge for a procedure?
Communication Godwin Co. owns three delivery trucks. Details for each truck at the end of the most recent year follow: At the beginning of the year, a hydraulic lift is added to Truck 1 at a cost of 4,500. The addition of the hydraulic lift will allow the company to deliver much larger objects than could previously be delivered. At the beginning of the year, the engine of Truck 2 is overhauled at a cost of 5,000. The engine overhaul will extend the trucks useful life by three years. Write a short memo to Godwins chief financial officer explaining the financial statement effects of the expenditures associated with Trucks 1 and 2.
A new medical practice purchases computer equipment that cost $15,000 to be used for medical billing. In addition, the practice purchases billing software that cost $5,000. Both the computer equipment and the software are expected to have 4-year useful lives and no salvage value. Calculate the 3 years of depreciation, using SL straight line.
Q4: Onslow Co. purchases a used machine for $178,000 cash on January 2 and readies it for use the next day at a $2,840 cost. On January 3, it is installed on a required operating platform costing $1,160, and it is further readied for operations. The company predicts the machine will be used for six years and have a $14,000 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of. Required Prepare journal entries to record the machine’s purchase and the costs to ready and install it. Cash is paid for all costs incurred. Prepare journal entries to record depreciation of the machine at December 31 of (a) its first year in operations and (b) the year of its disposal. Prepare journal entries to record the machine’s disposal under each of the following separate assumptions: (a) it is sold for $15,000 cash; (b) it is sold for $50,000 cash; and (c) it is destroyed in a fire and the…
On January 1, 2022 XYZ Inc. purchased a used truck for it's operations. The costs of the truck was $50,000. They paid $8,000 to add a new engine, $4,000 for the first year of insurance and $3,000 to have the truck painted with the company logo. The salvage value is $5,000. The estimated life in years is 8 and the estimated life in miles is 130,000 miles. Assume that 14,000 miles were driven in year one and 12,000 in year two. INSTRUCTIONS 1. Compute depreciation expense for the first 2 years under: a. Straight-line Method. b. Double-declining. c. Units-of-Activity. please dont give solutions in an image thank you
Stilton Ltd purchases a new delivery truck for $80,000 . The logo of the company is painted on the side of the truck for $1,000 . The truck registration is $500 , and a 12 -month accident insurance policy is $1,500 . The truck undergoes safety testing for $660 . What does Stilton Ltd record as the cost of the new truck? Select one: a. $81,660 . b. $80,000 . c. $83,060 . d. $81,000
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On 1 May 2020, Ron Trading purchased a new machine. The following paymentsrelate to the machine.List price $21,500Purchase discount $2,000Transportation cost $300Repair of damage parts incurred in transporting the machine $1,000Fees paid to test the machine before use $500Fees paid to the installer to install the machine $800Machine operator’s salary for the first month of operation $3,000Maintenance costs for the first month of operation $300(i) Identify and compute the cost of the machine to be recognised. Explainyour reasoning.(ii) Journalise the transactions. Assume the above payments are paid in cash.
xact Photo Service purchased a new color printer at the beginning of Year 1 for $38,000. The printer is expected to have a four-year useful life and a $3,500 salvage value. The expected print production is estimated at 1,500,000 pages. Actual print production for the four years was as follows: Year 1 390,000 Year 2 410,000 Year 3 420,000 Year 4 300,000 Total 1,520,000 The printer was sold at the end of Year 4 for $1,650. Requireda. Compute the depreciation expense for each of the four years, using double-declining-balance depreciation.
An engineer bought an equipment for P500,000. Other expenses including installations amounted to P30,000. At the end of its estimated useful life of 10 years. The salvage value will be 10% of the first cost. Solve using SYD Method.
An engineer bought equipment for P600,000. Other expenses including installation amounted to P30,000. At the end of its estimated useful life, of 10 years, the salvage value will be 10% of the first cost. What is the book value after 5 years using: A. Straight Line Method.B. Sum of the Years Digit
A company bought a new laptop for Engr. Reyes – their new employee. Thelaptop was advertised to have an economic life of 8 years and at that point, itwould cost 10% of its original price. Find the book value of the asset at its 4th yearif it cost P35,000 initially. 2. A machine has first cost of P13,000, an estimated life of 15 years, and anestimated salvage value of P1,000. Using the straight-line formula, find:a.) the annual depreciation chargeb.) the annual depreciation rate expressed as a percentagec.) the book value at the end 9 year. 3. A construction company decided to acquire a new delivery truck costingP1,200,000. The said truck is projected to last for 12 years and at that point itwould cost P140,000. Find the book value at its 7th year if it is depreciated usingsinking fund method at i=6.5%. 4. A plant erected to manufacture socks has a first cost of P10,000,000 with anestimated salvage value of P100,000 at the end of 25 years. Find its appraisedvalue to the nearest P100 by…