Question

Burrell Company purchased a machine for $35,000 on January 2, 2016. The machine has an estimated...

Burrell Company purchased a machine for $35,000 on January 2, 2016. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $17,500 each year. The tax rate is 30%.

Required: Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double-declining-balance depreciation methods. Assume that the machine is the company's only asset.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Depreciation Methods Gruman Company purchased a machine for $198,000 on January 2, 2016. It made the...
Depreciation Methods Gruman Company purchased a machine for $198,000 on January 2, 2016. It made the following estimates: Service life 5 years or 10,000 hours Production 200,000 units Residual value $20,000 In 2016, Gruman uses the machine for 1,800 hours and produces 44,000 units. In 2017, Gruman uses the machine for 1,500 hours and produces 35,000 units. If required, round your final answer to the nearest dollar. Required: Compute the depreciation for 2016 and 2017 under each of the following...
Depreciation Methods Gruman Company purchased a machine for $198,000 on January 2, 2016. It made the...
Depreciation Methods Gruman Company purchased a machine for $198,000 on January 2, 2016. It made the following estimates: Service life 5 years or 10,000 hours Production 180,000 units Residual value $ 18,000 In 2016, Gruman uses the machine for 2,000 hours and produces 50,000 units. In 2017, Gruman uses the machine for 1,200 hours and produces 32,000 units. If required, round your final answers to the nearest dollar. Required: Compute the depreciation for 2016 and 2017 under each of the...
On January 2, 2010, Sayre Company purchased a machine for $45,000. The machine has a five-year...
On January 2, 2010, Sayre Company purchased a machine for $45,000. The machine has a five-year          estimated useful life and a $3,000 estimated residual value. In addition, the company expects to use         the machine 200,000 hours. Assuming that the machine was used 35,000 and 45,000 hours during 2010          and 2011, respectively, complete the following chart. Depreciation Expense 1st Year Depreciation Expense 2nd Year Accumulated Depreciation Carrying(Book) Value Straight-line method Units-of-Production Method Double declining Balance Method
On January 1, 2017, a machine was purchased for $90,000. The machine has an estimated residual...
On January 1, 2017, a machine was purchased for $90,000. The machine has an estimated residual value of $6,000 and an estimated useful life of 5 years. The machine can operate for 100,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follow; 2017, 20,000 hours; 2018, 25,000 hours; 2019, 15,000 hours; 2020, 30,000 hours; and 2021, 10,000 hours. ((((((((((((((Instructions)))))))))))))))) A) Compute the annual depreciation charges over the machine’s...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, 2016, Fischer Company purchases a machine that manufactures...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, 2016, Fischer Company purchases a machine that manufactures a part for one of its key products. The machine cost $264,600 and is estimated to have a useful life of six years, with an expected salvage value of $22,500. Compute depreciation expense for 2016 and 2017 for the following depreciation methods. a. Straight-line. b. Double-declining balance. 2016 2017 Straight-line $Answer $Answer Double-declining Answer Answer
Essay Problem #1. The Jefferson Co. purchased a machine on January 1, 2016. The machine cost...
Essay Problem #1. The Jefferson Co. purchased a machine on January 1, 2016. The machine cost $595,000. It had an estimated life of ten years, or 30,000 units, and an estimated residual value of $40,000. In 2016, Jeffries produced 3,000 units. Required: Compute the depreciation charge for 2016 using each of the following methods: a. Double-declining-balance method b. Activity method (units of output) c. Sum-of-the-years'-digits method d. Straight-line method
Adelphi Company purchased a machine on January 1, 2017, for $90,000.  The machine was estimated to have...
Adelphi Company purchased a machine on January 1, 2017, for $90,000.  The machine was estimated to have a service life of ten years with an estimated residual value of $5,000.  Adelphi sold the machine on January 1, 2021 for $29,000. Adelphi uses the double declining method for depreciation. Using this information, how much is the gain or (loss) for the equipment sale entry made on January 1, 2021. Enter a loss as a negative number. Barbara is an employee of Baltimore Company....
On October 1, 2016, the Allegheny Corporation purchased machinery for $267,000. The estimated service life of...
On October 1, 2016, the Allegheny Corporation purchased machinery for $267,000. The estimated service life of the machinery is 10 years and the estimated residual value is $3,000. The machine is expected to produce 480,000 units during its life. Required: Calculate depreciation for 2016 and 2017 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service. (Do not round intermediate calculations.) 1. Straight line. Straight-Line Depreciation Choose Numerator: /...
Sketches Inc. purchased a machine on January 1, 2016. The cost of the machine was $41,000....
Sketches Inc. purchased a machine on January 1, 2016. The cost of the machine was $41,000. Its estimated residual value was $13,000 at the end of an estimated 5-year life. The company expects to produce a total of 20,000 units. The company produced 1,500 units in 2016 and 1,950 units in 2017. Required: a. Calculate depreciation expense for 2016 and 2017 using the straight-line method. b. Calculate the depreciation expense for 2016 and 2017 using the units-of-production method. (Do not...
1)Adelphi Company purchased a machine on January 1, 2017, for $80,000.  The machine was estimated to have...
1)Adelphi Company purchased a machine on January 1, 2017, for $80,000.  The machine was estimated to have a service life of ten years with an estimated residual value of $5,000.  Adelphi sold the machine on January 1, 2021 for $25,000. Adelphi uses the double declining method for depreciation. Using this information, how much is the gain or (loss) for the equipment sale entry made on January 1, 2021. Enter a loss as a negative number. 2) Barbara is an employee of Baltimore...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT