Sullivan Ranch Corporation has purchased a new tractor. The following information is given: Cost: 24 150,000 24 Estimated Residual: Estimated Life in years: 5 Estimated Life in hours: 7 Actual Hours: 10,000 4 1200 Year 1 360 Year 2 270 10 Year 3 350 中 11 Year 4 220 12

Sullivan Ranch Corporation has purchased a new tractor. The following information is given: Cost: 24 150,000 24 Estimated Residual: Estimated Life in years: 5 Estimated Life in hours: 7 Actual Hours: 10,000 4 1200 Year 1 360 Year 2 270 10 Year 3 350 中 11 Year 4 220 12

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section9.A: Depreciation

Problem 5P

See similar textbooks

Similar questions

Grandorf Company replaced the engine in a truck for 8,000 and expects the new engine will extend the life of the truck two years beyond the original estimated life. Related information is provided below. Cost of truck 65,000 Salvage value 5,000 Original estimated life 6 years The truck was purchased on January 1, 20-1. The engine was replaced on January 1, 20-6. Using straight-line depreciation, compute depreciation expense for 20-6.
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.
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.
Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $320,000. The estimated useful life was five years and the residual value was $50,000. Assume that the estimated productive life of the machine is 10,000 units. Expected annual production was year 1, 1,700 units; year 2, 1,600 units; year 3, 1,900 units; year 4, 2,400 units; and year 5, 2,400 units. Solar Innovations Corporation uses the units-of-production (activity-based) method of depreciation. Complete the following depreciation table. If necessary, round your interest expense calculations to the nearest whole dollar. Depreciation expense, accumulated depreciated,book value.
Can you please look at this problem and tell me how i am getting the question with the x wrong and give me the solution Perdue Company purchased equipment on April 1 for $77,760. The equipment was expected to have a useful life of three years, or 7,560 operating hours, and a residual value of $2,160. The equipment was used for 1,400 hours during Year 1, 2,600 hours in Year 2, 2,300 hours in Year 3, and 1,260 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) units-of-activity method, and (c) the double-declining-balance method. Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar. a. Straight-line method Year Amount Year 1 $fill in the blank 1 Year 2 $fill in the blank 2 Year 3 $fill in the blank 3 Year 4 $fill in the blank 4 b. Units-of-activity method…
MNVK Corp. purchased a computer system at a cost of $140,000 on January 1, 20X1. The estimated useful life is 10 years, and the estimated residual value is $10,000. Assuming MNVK uses the double-declining-balance method, what is the depreciation expense for 20X2? Select one: a. $22,800 b. $28,000 c. $26,000 d. $22,400 e. $20,800
The corporation purchased a machinery for P100,000.00 with an estimated useful life of 10 years. See table below for the following data. SCRAP VALUE PRODUCTION WORKING HOURS P4,000.00 400,000 units 120000 working-hours Year Production No. of Working-hours2002 36,000 units 14,0002003 44,000 units 18,000 What is the total depreciation for 2003 using Working Hours and Service Output Method?
Andrews Manufacturing Company purchased a new machine on July 1, 20x1. It was expected to produce 200,000 units of product over its estimated useful life of eight years. Total cost of the machine was ₱600,000, and residual value was estimated to be ₱60,000. Actual units produced by the machine in 2001 and 2002 are shown below. 20x1 .............................................. 16,000 units 20x2 .............................................. 30,000 units Andrews reports on a calendar-year basis and uses the units-of-production method of depreciation. The amount of depreciation expense for this machine in 20x2 would be a.124,200 c. 81,000 b.90,000 d. 74,520
Fields Company purchased equipment on January 1 for $180,000. This system has a useful life of 8 years and a salvage value of $20,000. The company estimates that the equipment will produce 40,000 units over its 8-year useful life. Actual units produced are: Year 1 – 4,000 units; Year 2 – 6,000 units; Year 3 – 8,000 units; Year 4 – 5,000 units; Year 5 – 4,000 units; Year 6 – 5,000 units; Year 7 – 7,000 units; Year 8 – 3,000 units. What would be the depreciation expense for the final year of its useful life using the units-of-production method? Group of answer choices $24,000. $33,750. $12,000. $4,000. $164,000.
An industrial plant bought a generator set for P250T, other expenses including installation amounted to P10T. The generator set is to have a life of 10 years with a salvage value at the end of life is 5% of the original cost. Determine the book value at the end of 5th year using SF at 12%. a. P170,402.103 b. P140,702.105 c. P142,702.105 d. P124,702.105
Joe Production purchased a new computerized machine at a cost of $450,000. The machine has a residual value of $64,000 and an expected lifeof 5 years. The actual machine hours were a total of 154,400 over the 5 years. Each year the hours were: 55,000 in year 1, 50,000 in year 2, 30,000 inyear 3, 13,000 in year 4, and 6,400 in year 5. Calculate the depreciation cost per machine hour. Calculate the depreciation expense, accumulated depreciation and book value for all 5 years of the machine's expectedlife using the units of production method of depreciation.
Lotus contractors construction. Building cost= $13650000. Weighted average accumulated expenditures = $5600000 Actual interest was $562000, and avoidable interest was $272000. If the salvage value is $1150000, and the useful life is 40 years, depreciation expense for the first full year using the straight-line method is A.$319300 B.$348050 C.$326100 D.$459300