INTERMEDIATE ACCOUNTING-ACCESS >CUSTOM<
9th Edition
ISBN: 9781260699555
Author: SPICELAND
Publisher: MCG CUSTOM
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Textbook Question
Chapter 11, Problem 11.6E
• LO11–2
On April 30, 2018, Quality Appliances purchased equipment for $260,000. The estimated service life of the equipment is six years and the estimated residual value is $20,000. Quality’s fiscal year ends on December 31.
Required:
Calculate depreciation for 2018 and 2019 using each of the three methods listed. Quality calculates partial year depreciation based on the number of months the asset is in service. Round all computations to the nearest dollar.
1. Straight-line
2. Sum-of-the-years’-digits
3. Double-declining balance
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Week 10Nevertire Ltd purchased a delivery van costing $52,000. It is expected to have a residual value of$12,000 at the end of its useful life of 4 years or 200,000 kilometres. Ignore GST.Required:a) Assume the van was purchased on 1 July 2019 and that the accounting period ends on 30 June.Calculate the depreciation expense for the year 2019–20 using each of the following depreciationmethods straight-line diminishing balance (depreciation rate has been calculated as 31%) units of production (assume the van was driven 78,000 kilometres during the financial year)b) Record the adjusting entries for the depreciation at 30 June 2021 using diminishing balancemethod. c) Show how the van would appear in the balance sheet prepared at the end of year 2 using Straight line method.
Computing Partial Period Depreciation under Multiple Depreciation Methods
To demonstrate the computations involved in several methods of depreciating a fixed asset, the following information is provided.
Cost and residual value
Estimated service life
Acquisition cost
$62,500
Years
5
Residual value
$2,500
Service hours
50,000
Productive output (units)
120,000
d. Sum-of-the-years’-digits method: Compute the depreciation amount for each year.
2020
2021
2022
2023
2024
2025
Answer
Answer
Answer
Answer
Answer
Answer
e. Double-declining-balance method: Compute the depreciation amount for each year.
2020
2021
2022
2023
2024
2025
Answer
Answer
Answer
Answer
Answer
Answer
Required
Compute the annual depreciation using each of the following methods assuming that the asset was purchased on August 1, 2020.
Exercise 11-3 (Aigo) Depreciation methods; partial periods [LUT1-2]
The following information applies to the questions displayed below.]
On October 1, 2024, the Allegheny Corporation purchased equipment for $233,000. The estimated service life of the
equipment is 10 years and the estimated residual value is $2,000. The equipment is expected to produce 420,000 units
during its life.
Required:
Calculate depreciation for 2024 and 2025 using each of the following methods. Partial-year depreciation is calculated
based on the number of months the asset is in service.
Exercise 11-3 (Algo) Part 2
2. Double-declining-balance.
Depreciation Expense
=
$
11,650
Formula
Beginning Book Value
Double-Declining-Balance Method
xDouble the Straight-line Rate
X
Fraction of Year
=
Amount for 2024
$
233,000
x
20 %
x
3/12
Amount for 2025
X
20 %
*
12/12
=
Chapter 11 Solutions
INTERMEDIATE ACCOUNTING-ACCESS >CUSTOM<
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