Required information Use the following information for the Exercises below. [The following information applies to the questions displayed below.] Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $49,000. The machine's useful life is estimated at 10 years, or 400,000 units of product, with a $9,000 salvage value. During its second year, the machine produces 34,000 units of product. Exercise 8-5 Units-of-production depreciation LO P1 Determine the machine's second-year depreciation using the units-of-production method. Units-of-production Depreciation Choose Numerator: Choose Denominator: Annual Depreciation Expense Depreciation expense per unit Year Annual Production (units) Depreciation Expense 2
Q: Required information Use the following information for the Exercises below. [The following…
A: Depreciation is the loss in the value of the asset caused due to its usage, wear, and tear. There…
Q: Required information [The following information applies to the questions displayed below.] Ramirez…
A: Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets…
Q: Required information [The following information applies to the questions displayed below.] Ramirez…
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: Formula: Depreciation expense per unit = ( Total cost - salvage value ) / Number of units
Q: ! Required information [The following information applies to the questions displayed below.] Ramirez…
A: Depreciable value=Cost of asset-Salavge valueDepreciation per unit=Depreciable valueUnits of product…
Q: Use the following information for the Exercises below. (Algo) Skip to question [The following…
A: Introduction: Straight line depreciation is the standard method for distributing the recognition of…
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: [The following information applies to the questions displayed below.] Ramirez Company installs a…
A: Double declining balance rate = (1/useful life) x 2…
Q: Required information Use the following information for the Exercises below. (Algo) Skip to…
A: Depreciation Expense - Depreciation is charged on the assets for the purpose of use, wear and tear,…
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: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Under the units-of-production method or activity method the yearly depreciation is calculated based…
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: Required information [The following information applies to the questions displayed below.] Ramirez…
A: Depreciation is considered as an expense charge on the value of the Asset. It can be calculated by…
Q: Required information Use the following information for the Exercises below. (Algo) [The following…
A: Under the production units, method depreciation for each unit produced by the asset is calculated.…
Q: Required information [The following information applies to the questions displayed below.] Ramirez…
A: Depreciation is considered as an expense charge on the value of the Asset. It can be calculated by…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Under double declining method, depreciation is charged on reduced value after every year with the…
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: Required Information [The following information applies to the questions displayed below.] Ramirez…
A: Depreciation under straight line Method= (cost of Machine-salvage value)/Useful life of the assets
Q: A machine costing $210,600 with a four-year life and an estimated $17,000 salvage value is installed…
A: Depreciation refers to the charge that represents the decline in the value of fixed asset. The…
Q: [The following information applies to the questions displayed below.] Ramirez Company installs a…
A: Business organizations are required to charge the depreciation expense so that the assets are shown…
Q: A machine costing $207,400 with a four-year life and an estimated $17,000 salvage value is installed…
A: Depreciation can be referred to as the fall in the value of a fixed asset due to the usage, wear and…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Units produced in year 1 = Total units/useful life. = 399,000/10 =39900 units
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: displayed below.] Ramirez Company installs a computerized manufacturing machine in its factory at…
A: Under straight method the depreciation is uniform for all years. Computation of depreciation per…
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: A machine costing $209,400 with a four-year life and an estimated $19,000 salvage value is installed…
A: Introduction: Depreciation: Decreasing value of fixed assets over its useful life period called as…
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: A machine costing $210,600 with a four-year life and an estimated $17,000 salvage value is installed…
A: Straight line depreciation is a method for charging depreciation expense on the cost of the asset…
Q: se the following information for the Exercises below. (Algo) Skip to question [The following…
A: Introduction: A tangible item's cost can be spread out over the period of its useful life using the…
Q: Requlred Informatlon Use the following information for the Exercises below. [The following…
A: 1. Depreciation- Depreciation is calculated to capture the wear and tear of the assets for the…
Q: A machine costing $209,400 with a four-year life and an estimated $19,000 salvage value is installed…
A: Depreciation is the reduction in value in fixed asset over a period of time. This reduction is…
Q: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the…
A: Depreciation expense = Cost - Salvage valueEstimated useful life
Q: Required information Use the following information for the Exercises below. [The following…
A: Depreciation is a reduction in the value of assets due to the usage of that asset. We can evaluate…
Q: Frank Moran manages the cutting department of Greene Timber Company. He purchased a tree-cutting…
A: Income statement refers to the financial statement which shows the financial performance for an…
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: A machine costing $210,000 with a four-year life and an estimated $16,000 salvage value Is Installed…
A: The question is related to Depreciation Accounting. In Straight-line Method of Depreciation the…
Q: A machine costing $217,200 with a four-year life and an estimated $20,000 salvage value is installed…
A: Double declining balance method is a method of charging depreciation, under which depreciation is…
Q: Required information [The following information applies to the questions displayed below.] Ramirez…
A: The depreciation expense is charged on fixed assets as reduced value of the fixed assets with the…
Q: Required information Use the following information for the Exercises below. [The following…
A: Depreciation is the loss in the value of the asset caused due to its usage, wear, and tear. There…
Q: Use the following information for the Exercises below. [The following information applies to the…
A: Depreciation is the allocation of cost of asset over the useful life of the asset. Under double…
Q: Requlred Informatlon Use the following information for the Exercises below. [The following…
A: Solution. Cost = $85,400 Salvage = $5,000 Production = 402,000 units over the useful life…
Q: Requlred Information Use the following information for the Exercises below. [The following…
A: The deprecation expense is charged on fixed assets as reduction in the value of fixed assets with…
Q: A machine costing $209,600 with a four-year life and an estimated $16,000 salvage value is installed…
A: Straight Line Method: It is the method of depreciation, the process of expensing an asset over a…
Q: A machine costing $209,600 with a four-year life and an estimated $16,000 salvage value is installed…
A: Straight-line Depreciation = (Original Cost - Salvage Value) / Useful Life Units of Production…
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: A machine costing $210,400 with a four-year life and an estimated $18,000 salvage value is installed…
A: Solution Given Cost 210400 Salvage value 18000 Useful life in years 4 year…
Q: Required information Use the following information for the Exercises below. [The following…
A: Under units of production method, depreciation expense per unit is calculated by dividing…
Q: Required information Use the following information for the Exercises below. [The following…
A: In accounting depreciation is the technique utilized to reduce the asset value over a period of…
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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?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. With DEPREC5 still on the screen, click the Chart sheet tab. This chart shows the accumulated depreciation under all three depreciation methods. Identify below the depreciation method that each represents. Series 1 _____________________ Series 2 _____________________ Series 3 _____________________ When the assignment is complete, close the file without saving it again. Worksheet. The problem thus far has assumed that assets are depreciated a full year in the year acquired. Normally, depreciation begins in the month acquired. For example, an asset acquired at the beginning of April is depreciated for only nine months in the year of acquisition. Modify the DEPREC2 worksheet to include the month of acquisition as an additional item of input. To demonstrate proper handling of this factor on the depreciation schedule, modify the formulas for the first two years. Some of the formulas may not actually need to be revised. Do not modify the formulas for Years 3 through 8 and ignore the numbers shown in those years. Some will be incorrect as will be some of the totals. Preview the printout to make sure that the worksheet will print neatly on one page, and then print the worksheet. Save the completed file as DEPRECT. Hint: Insert the month in row 6 of the Data Section specifying the month by a number (e.g., April is the fourth month of the year). Redo the formulas for Years 1 and 2. For the units of production method, assume no change in the estimated hours for both years. Chart. Using the DEPREC5 file, prepare a line chart or XY chart that plots annual depreciation expense under all three depreciation methods. No Chart Data Table is needed; use the range B29 to E36 on the worksheet as a basis for preparing the chart if you prepare an XY chart. Use C29 to E36 if you prepare a line chart. Enter your name somewhere on the chart. Save the file again as DEPREC5. Print the chart.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
- 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?
- 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.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.
- 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.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.Santa Rosa recently purchased a new boat to help ship product overseas. The following information is related to that purchase: Purchase price $4,500,000 Cost to bring boat to production facility $25,000 Yearly insurance cost $25,000 Annual maintenance cost of $30,000 Received 8% discount on sales price Determine the acquisition cost of the boat, and record the journal entry needed.