Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $47,500. The machine's useful life is estimated at 10 years, or 405,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 34,500 units of product.
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A:
Q: A sewing machine in a textile mill was purchased for $223,000, has an estimated residual of $22,000…
A: Solution: Depreciable cost= Cost of machine - residual value = $223,000 - $22,000 = $201,000…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Under Units of production method : Depreciation =(Cost of asset - salvage value )×Actual Units…
Q: A machine costing $210,000 with a four-year life and an estimated $16,000 salvage value Is Installed…
A: Depreciation under straight-line method = ( Historical cost- Salvage value)/Useful life Depreciation…
Q: [The following information applies to the questions displayed below.] Ramirez Company installs a…
A: Every fixed asset loses out its value over the period of time. Depreciation is being recorded on…
Q: A machine costing $209,600 with a four-year life and an estimated $16,000 salvage value is installed…
A: Depreciation is charged on value of assets for the normal wear and tear expense and for the repair…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Lets understand the basics. Depreciation is a reduction in value of asset due to wear and tear,…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Deprecioation expense per unit = (Cost - Salvage value)/Total units of production
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: GIVEN Ramirez Company installs a computerized manufacturing machine in its factory at the…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: 1. Depreciation Expenses - Depreciation Expenses are the expense incurred on the wear and tear of…
Q: oyer Digital Components Company assembles circuit boards by using a manually operated machine to…
A: In case, business has two alternatives of one is to continue with old machine and second is replace…
Q: [The following information applies to the questions displayed below.] Ramirez Company installs a…
A: With the passage of time, the value of machinery goes on decreasing due to normal wear or tear,…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: With the passage of time, the value of machinery goes on decreasing due to normal wear or tear,…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Introduction: The unit of production approach is a method for determining the value of an asset's…
Q: A machine costing $209;600 with a four-year life and an estimated $16,000 salvage value is installed…
A: Straight line depreciation = ( Initial Cost - Salvage Value ) / Estimated useful life…
Q: Wickland Company installs a manufacturing machine in its production facility at the beginning of the…
A: As per the straight-line depreciation method, equal depreciation is charged each year. in simple…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Depreciation per unit (Units of production method) =(cost of Asset - salvage value ) / Estimated…
Q: AEC purchased an equipment for its manufacturing plant that costs PhP 3 750 000. It is estimated to…
A: In the context of the given question, we are going to compute the book value of the plant after…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Depreciation is a reduction in the value of assets due to the usage of that asset. We can evaluate…
Q: [The following information applies to the questions displayed below.] Ramirez Company installs a…
A: The question is based on the concept of Cost Accounting.
Q: Boyer Digital Components Company assembles circuit boards by using a manually operated machine to…
A: Differential analysis is the process of comparing and contrasting the costs and advantages of…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Depreciation represents the reduction in the value of an asset over a useful life of the asset. It…
Q: AEC purchased an equipment for its manufacturing plant that costs PhP 3,750,000 + 10,000(x). It is…
A: Depreciation seems to be an accounting method for assigning costs of a physical or tangible asset…
Q: Flint Tooling Company is considering replacing a machine that has been used in its factory for four…
A: Given the following information: Old MachineCost of machine, ten-year life: $108,800Annual…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Annual Depreciation (Units of production method) =[( cost of Asset - salvage value ) x Annual…
Q: A machine costing $257,500 with a four-year life and an estimated $20,000 salvage value is installed…
A: The following computations for the machine purchased.
Q: A machine costing $209,000 with a four-year life and an estimated $17,000 salvage value is installed…
A: Given that, cost of the asset = $209000 salvage value of asset = $17000 use ful life of asset = 4…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Depreciation means the loss in value of assets because of usage of assets , passage of time or…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: We can calculate the depreciation expense using the Double Declining Balance method as follows:-…
Q: The cost of an asset is RO 50,000 and has an estimated use value of 20,000 hours. During the first…
A: Depreciable base=Cost of an asset-Salvage value=RO 50,000-RO 4,000=RO 46,000
Q: A machine costing $213,200 with a four-year life and an estimated $18,000 salvage value is installed…
A: please like the answer your response matters Depreciable amount of the machine = Cost - Salvage…
Q: Boyer Digital Components Company assembles circuit boards by using a manually operated machine to…
A: Differential Analysis: Differential analysis refers to the analysis of differential revenue that…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Depreciation is the charge on the asset over its useful life due to its wear and tear. There are…
Q: Boyer Digital Components Company assembles circuit boards by using a manually operated machine to…
A: Differential Analysis continue with old machine / replace old machine Continue with old machine…
Q: AEC purchased an equipment for its manufacturing plant that costs PhP 3,750,000 + 10,000(x). It is…
A: Depreciation under straight-line method = (Historical cost - Salvage value)/Useful life Net Book…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: In straight line depreciation there is uniformly annual depreciation depending upon life of…
Q: A machine costing $215,000 with a four-year life and an estimated $19,000 salvage value is installed…
A: Annual Straight-Line Depreciation Expense=Cost of Asset-Salvage valueUseful Life Double-Declining…
Q: Andrews Manufacturing Company purchased a new machine on July 1, 20x1. It was expected to produce…
A: SOLUTION- DEPRECIABLE VALUE = ORIGINAL COST - SCRAP VALUE. ANNUAL DEPRECIATION = DEPRECIABLE VALUE…
Q: Flint Tooling Company is considering replacing a machine that has been used in its factory for four…
A: 1. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2)…
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A: Formula: Straight line method = ( Asset cost - Salvage value ) / Useful life years
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A: Any expenditure that increases the performance or life of the equipment should be capitalized (i.e.,…
Q: A machine costing $257,500 with a four-year life and an estimated $20,000 salvage value is installed…
A: The declining balance method is a method of charging the depreciation in which the higher amount of…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Depreciation is the expenses which is actually the charge or usage of asset during the period.…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Annual depreciation as per straight line method = (Cost - Salvage value)/Useful life
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Depreciation expense per unit = (Cost of machine - Salvage value) / Total units of production…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Because an asset is bound to experience wear and tear over time, depreciation must be provided. This…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Depreciation: It is an non-cash expense which is charged on fixed assets of the organisation.
Q: ramirez company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Depreciation is the gradual decline that occurs in the asset’s value. It is recorded as a non-cash…
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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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?IMPACT OF IMPROVEMENTS AND REPLACEMENTS ON THE CALCULATION OF DEPRECIATION On January 1, 20-1, two flight simulators were purchased by a space camp for 77,000 each with a salvage value of 5,000 each and estimated useful lives of eight years. On January 1, 20-2, the hydraulic system for Simulator A was replaced for 6,000 cash and an updated computer for more advanced students was installed in Simulator B for 9,000 cash. The hydraulic system is expected to extend the life of Simulator A three years beyond the original estimate. REQUIRED 1. Using the straight-line method, prepare general journal entries for depreciation on December 31, 20-1, for Simulators A and B. 2. Enter the transactions for January 20-2 in a general journal. 3. Assuming no other additions, improvements, or replacements, calculate the depreciation expense for each simulator for 20-2 through 20-8.During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated five machines for $100,000 to improve efficiency in production of their remaining useful life of five years Low-cost repairs throughout the year totaled $70,000 Replaced a broken gear on a machine for $10,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?
- 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.During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated seven machines for $250,000 to improve efficiency in production of their remaining useful life of eight years Low-cost repairs throughout the year totaled $79,000 Replaced a broken gear on a machine for $6,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?The activity of moving materials uses four forklifts, each leased for 18,000 per year. A forklift is capable of making 5,000 moves per year, where a move is defined as a round trip from the plant to the warehouse and back. During the year, a total of 18,000 moves were made. What is the cost of the unused capacity for the moving goods activity? a. 5,400 b. 1,800 c. 7,200 d. 3,600
- Montello Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for 120,000 miles. Montello uses the units-of-production depreciation method and in year one it expects to use the truck for 23,000 miles. Calculate the annual depreciation expense.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.A truck was recently purchased for 75,000 with a salvage value of 5,000 and an estimated useful life of eight years or 150,000 miles (24,000 miles per year for the first five years and 10,000 miles per year after that). Enter the new information in the Data Section of the worksheet. Again, make sure the totals for all three methods are in agreement. Print the worksheet. Save this new data as DEPREC5.
- Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value at the time of purchase was $15,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. Calculate annual depreciation expense for the first four years. Determine the depreciation expense for the final fifteen years of the assets life, and create the journal entry for year five.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.IMPACT OF IMPROVEMENTS AND REPLACEMENTS ON THE CALCULATION OF DEPRECIATION On January 1, 20-1, Dans Demolition purchased two jackhammers for 2,500 each with a salvage value of 100 each and estimated useful lives of four years. On January 1, 20-2, a stronger blade to improve performance was installed in Jackhammer A for 800 cash and the compressor was replaced in Jackhammer B for 200 cash. The compressor is expected to extend the life of Jackhammer B one year beyond the original estimate. REQUIRED 1. Using the straight-line method, prepare general journal entries for depreciation on December 31, 20-1, for Jackhammers A and B. 2. Enter the transactions for January 20-2 in a general journal. 3. Assuming no other additions, improvements, or replacements, calculate the depreciation expense for each jackhammer for 20-2 through 20-4.