Bundle: Financial & Managerial Accounting, Loose-Leaf Version, 14th + CengageNOWv2, 2 terms Printed Access Card
14th Edition
ISBN: 9781337591010
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter 9, Problem 9.3TIF
Communication
Godwin Co. owns three delivery trucks. Details for each truck at the end of the most recent year follow:
| Age | Expected Useful Life | Initial Cost | Accumulated |
|
| Truck 1 | 3 | 6 | $22,500 | $11,250 |
| Truck 2 | 5 | 6 | 26,250 | 21,875 |
| Truck 3 | 2 | 6 | 28,500 | 9,500 |
- 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 truck’s useful life by three years.
Write a short memo to Godwin’s chief financial officer explaining the financial statement effects of the expenditures associated with Trucks 1 and 2.
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Students have asked these similar questions
Godwin Co. owns three delivery trucks. Details for each truck at the end of the most
recent year follow:
Expected
Useful Life
Accumulated
Initial Cost
Depreciation
Age
Truck 1
$22,500
$11,250
3
Truck 2
26,250
21,875
Truck 3
2
28,500
9,500
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 truck's useful life by three years.
Write a short memo to Godwin's chief financial officer explaining the financial
statement effects of the expenditures associated with Trucks 1 and 2.
Barefoot Industrial acquired a new delivery truck at the beginning of its current fiscal year. The truck cost $27,000 and has an
estimated useful life of four years and an estimated salvage value of $4,000.
Required:
a-1. Calculate depreciation expense for each year of the truck's life using Straight-line depreciation.
Depreciation expense $ 13,500 per year
a-2. Calculate depreciation expense for each year of the truck's life using Double-declining-balance depreciation.
Year Depreciation Expense
1
$
27,000
6,750
6,750
3,375
2
3
4
$
$
b. Calculate the truck's net book value at the end of its third year of use under each depreciation method.
Depreciation method
Straight-line depreciation
Double-declining-balance
depreciation
Net book value
S
5,750
S
6,750
c. Assume that Barefoot Industrial had no more use for the truck after the end of the third year and that at the beginning of the fourth
year It had an offer from a buyer who was willing to pay $6,300 for the truck. Should the…
Screen Gems Movie Theater purchased a new
projector for $155,000 with a salvage value of
$2,000. Delivery and installation amounted to
$580. The projector is expected to have a
useful life of 15,000 hours. Complete the
following depreciation schedule for the first
four years of operation by using the units-of-
production method.
Screen Gems Movie Theater Units-of-
Production Depreciation Schedule
Projector
End of Year
1
2
3
4
Depreciation Hours Annual
per Hour
2,300
1,890
2,160
2,530
Depreciation
Accumulated Book
Depreciation Value
Please fill out all blank spaces, and provide
explanations!
(new)
Chapter 9 Solutions
Bundle: Financial & Managerial Accounting, Loose-Leaf Version, 14th + CengageNOWv2, 2 terms Printed Access Card
Ch. 9 - ONeil Office Supplies has a fleet of automobiles...Ch. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Distinguish between the accounting for capital...Ch. 9 - Immediately after a used truck is acquired, a new...Ch. 9 - Keyser Company purchased a machine that has a...Ch. 9 - Is it necessary for a business to use the same...Ch. 9 - A. Under what conditions is the use of an...Ch. 9 - For some of the fixed assets of a business, the...Ch. 9 - A. Over what period of time should the cost of a...
Ch. 9 - Straight-line depreciation A building acquired at...Ch. 9 - Units-of-activity depreciation A truck acquired at...Ch. 9 - Double-declining-balance depreciation A building...Ch. 9 - Revision of depreciation Equipment with a cost of...Ch. 9 - Capital and revenue expenditures On February 14,...Ch. 9 - Sale of equipment Equipment was acquired at the...Ch. 9 - Prob. 9.7BECh. 9 - Prob. 9.8BECh. 9 - Costs of acquiring fixed assets Melinda Staffers...Ch. 9 - Prob. 9.2EXCh. 9 - Prob. 9.3EXCh. 9 - Nature of depreciation Tri-City Ironworks Co....Ch. 9 - Straight-line depreciation rates Convert each of...Ch. 9 - Straight-line depreciation A refrigerator used by...Ch. 9 - Depreciation by units-of-activity method A...Ch. 9 - Depreciation by units-of-activity method Prior to...Ch. 9 - Depreciation by two methods A Kubota tractor...Ch. 9 - Depreciation by two methods A storage tank...Ch. 9 - Partial-year depreciation Equipment acquired at a...Ch. 9 - Revision of depreciation A building with a cost of...Ch. 9 - Prob. 9.13EXCh. 9 - Capital and revenue expenditures Jackie Fox owns...Ch. 9 - Capital and revenue expenditures Quality Move...Ch. 9 - Prob. 9.16EXCh. 9 - Entries for sale of fixed asset Equipment acquired...Ch. 9 - Prob. 9.18EXCh. 9 - Depletion entries Alaska Mining Co. acquired...Ch. 9 - Prob. 9.20EXCh. 9 - Prob. 9.21EXCh. 9 - Balance sheet presentation List the errors you...Ch. 9 - Asset traded for similar asset A printing press...Ch. 9 - Prob. 9.24EXCh. 9 - Prob. 9.25EXCh. 9 - Entries for trade of fixed asset On October 1,...Ch. 9 - Prob. 9.1APRCh. 9 - Comparing three depreciation methods Dexter...Ch. 9 - Depreciation by three methods; partial years...Ch. 9 - Depreciation by two methods; sale of fixed asset...Ch. 9 - Prob. 9.5APRCh. 9 - Amortization and depletion entries Data related to...Ch. 9 - Allocating payments and receipts to fixed asset...Ch. 9 - Prob. 9.2BPRCh. 9 - Prob. 9.3BPRCh. 9 - Prob. 9.4BPRCh. 9 - Transactions for fixed assets, including sale The...Ch. 9 - Amortization and depletion entries Data related to...Ch. 9 - Continuing Company AnalysisAmazon: Fixed asset...Ch. 9 - Verizon: Fixed asset turnover ratio Verizon...Ch. 9 - FedEx and UPS: Fixed asset turnover ratio FedEx...Ch. 9 - Comcast, Google, and Walmart: Fixed asset turnover...Ch. 9 - Ethics in Action Hard Bodies Co. is a fitness...Ch. 9 - Communication Godwin Co. owns three delivery...
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