   Chapter 17, Problem 3AT ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Oxford Manufacturing. Inc., purchased new equipment totaling $648,000. Shipping charges were$2,200, and installation amounted to $1,800. The equipment is expected to last 4 years and have a residual value of$33,000. If the company elects to use the straight-line method of depreciation, prepare a depreciation schedule for these assets.Oxford Manufacturing, Inc. Straight-Line Depreciation Schedule Manufacturing Equipment End of Year AnnualDepreciation AccumulatedDepreciation BookValue (new) 1 2 3 4

To determine

To calculate: The annual depreciation, accumulated depreciation and book value of Oxford Manufacturing’s equipment when the equipment purchased cost is $648,000, shipping charges are$2,200 and installation amounted to $1,800. And also prepare the depreciation schedule of these assets by the use of straight-line method. Explanation Given Information: The cost of the new equipment purchased by Oxford Manufacturing is$648,000

The shipping and the installation charges are $2,200 and$1,800, respectively.

The residual value of equipment is $33,000 and Expected life is 4 years. Formula used: The steps to prepare depreciation schedule by straight line method are as follows: Step 1: Calculate the total cost. Step 2: Calculate the total amount of depreciation by subtracting salvage value from the total cost. Total depreciation = Total cost Salvage value Step 3: Divide the total amount of depreciation by the estimated useful life and calculate the annual depreciation Annual depreciation = Total depreciationEstimated useful life (years) Step 4: Prepare the depreciation schedule in form of chart. Book value, Book value = Original cost Accumulated depreciation Calculation: Consider the provided data, Cost of the new equipment is$648,000

The shipping and the installation charges are $2,200 and$1,800, respectively.

The total cost of the equipment is:

Total cost=Cost of equipment+Shipping cost+Installation cost

Now, by the use of the above formula, the total cost of the equipment is,

Total cost=$648,000+$2,200+$1,800=$652,000

Now, the residual value of equipment is $33,000 and expected to last 4 years. The total amount of depreciation is, Total amount of depreciation=Total costSalvage cost Now, by the use of the above formula, the total amount of depreciation is, Total amount of depreciation=$652,000$33,000=$619,000

The total amount of annual depreciation is,

Total amount of annual depreciation=Total depreciationestimated useful life

Now, by the use of above formula, the total amount of annual depreciation is,

Total amount of annual depreciation=$619,0004=$154,750

Book value in the first year will be,

Book value = Original cost  Accumulated depreciation=$652,000$154,750=\$497,250

Now, as the method used is straight line depreciation therefore the annual depreciation is same every year

### Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

#### The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

#### Find more solutions based on key concepts 