Question

(Detailed Explanation Please) On January 1, Year 2, Ballard Company spent $12,000 on an asset to...

(Detailed Explanation Please)

On January 1, Year 2, Ballard Company spent $12,000 on an asset to improve its quality. The asset had been purchased on January 1, Year 1, for $38,000. The asset had a $6,800 salvage value and a 6-year life. Ballard uses straight-line depreciation. What would be the book value of the asset on January 1, Year 5?

Multiple Choice

  • $15,600.

  • $15,200.

  • $7,600.

  • $22,000.

Homework Answers

Answer #1

Answer : Option D, $22,000

Explanation :

Using Straight Line method:

Annual Depreciation = (Cost – Salvage value)/ No of Years

Annual Depreciation = (38,000 – 6,800) / 6

Annual Depreciation for year 1 = $ 5,200

Book Value of Equipment when additional amount was spent = (38,000 – 5,200) = $ 32,800

Revised Book Value after improving the quality = $32,800 + $12,000 = $ 44,800

Revised life of asset = 5 years

New Annual Depreciation Expenses = (44,800 – 6,800) / 5

New Annual Depreciation Expenses = $ 7,600

Depreciation expenses for 3 years(year 2 to year 4)= $ 7,600 * 3 = $ 22,800

Therefore, the book Value of asset as on January 01, year 5 = ($44,800 – $22,800) = $ 22,000

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, Year 2, Ballard Company spent $8,000 on an asset to improve its quality....
On January 1, Year 2, Ballard Company spent $8,000 on an asset to improve its quality. The asset had been purchased on January 1, Year 1, for $30,000. The asset had a $3,600 salvage value and a 6-year life. Ballard uses straight-line depreciation. What would be the book value of the asset on January 1, Year 5? Multiple Choice: $13,200. $15,600. $12,000. $6,000.
On January 1, Year 2, Ballard Company spent $17,000 on an asset to improve its quality....
On January 1, Year 2, Ballard Company spent $17,000 on an asset to improve its quality. The asset had been purchased on January 1, Year 1, for $48,000. The asset had a $10,800 salvage value and a 6-year life. Ballard uses straight-line depreciation. What would be the book value of the asset on January 1, Year 5? Select one: A. $30,000. B. $9600. C. $19,200. D. $18,600.
On January 1, Year 1, Ballard company purchased a machine for $58,000. On January 1, Year...
On January 1, Year 1, Ballard company purchased a machine for $58,000. On January 1, Year 2, the company spent $22,000 to improve its quality. The machine had a $14,800 salvage value and a 6-year life, which are unchanged. Ballard uses the straight-line method. What is the book value of the machine on December 31, Year 4? $23,200 $21,600 $11,600 $38,000
(Detailed Explanation Please) Jing Company was started on January 1, Year 1 when it issued common...
(Detailed Explanation Please) Jing Company was started on January 1, Year 1 when it issued common stock for $40,000 cash. Also, on January 1, Year 1 the company purchased office equipment that cost $18,000 cash. The equipment was delivered under terms FOB shipping point, and transportation cost was $2,500. The equipment had a five-year useful life and a $6,500 expected salvage value. Using double-declining-balance depreciation, what the amount of depreciation expense and the amount of accumulated depreciation, respectively, that would...
On January 1, Year 1, Friedman Company purchased a truck that cost $50,000. The truck had...
On January 1, Year 1, Friedman Company purchased a truck that cost $50,000. The truck had an expected useful life of 8 years and an $9,000 salvage value. Friedman uses the double-declining-balance method. What is the book value of the truck at the end of Year 1? (Do not round intermediate calculations.) Multiple Choice $28,500 $37,500 $39,750 $30,750
XYZ Inc. purchased an asset on January 1, 2015, for $12,800. The asset was expected to...
XYZ Inc. purchased an asset on January 1, 2015, for $12,800. The asset was expected to have a ten-year life and a $1,000 salvage value. XYZ Inc. uses the straight-line method of depreciation. On January 1, 2017, XYZ Inc. made a major repair to the asset of $5,000, extending its life. The asset is expected to last ten years from January 1, 2017. Calculate the amount of depreciation for 2017.
Please show your work! On January 1, Year 1, Beth Company paid $21,400 cash to purchase...
Please show your work! On January 1, Year 1, Beth Company paid $21,400 cash to purchase a equipment. The equipment was expected to have a ten year useful life and an $4,200 salvage value. If Beth uses the double declining balance method, the book value at the end of Year 1 is $_______ ====================== As part of a major renovation at the beginning of the year, Atiase Pharmaceuticals, Inc. sold shelving units (recorded as Equipment) that were 9 years old...
On January 1, 2016, Friedman Company purchased a truck that cost $48,000. The truck had an...
On January 1, 2016, Friedman Company purchased a truck that cost $48,000. The truck had an expected useful life of 8 years and an $8,000 salvage value. The book value of the truck at the end of 2016, assuming that Friedman uses the double declining balance method, is: $38,000. $38,400. $32,000. $36,000.
On January 1, Year 1, the City Taxi Company purchased a new taxi cab for $48,000....
On January 1, Year 1, the City Taxi Company purchased a new taxi cab for $48,000. The cab has an expected salvage value of $10,000. The company estimates that the cab will be driven 200,000 miles over its life. It uses the units-of-production method to determine depreciation expense. The cab was driven 57,000 miles the first year and 60,000 the second year. What is the amount of depreciation expense reported on the Year 2 income statement and the book value...
On January 1, 2020, ABC Company spent $400,000 to purchase equipment. The equipment was assigned a...
On January 1, 2020, ABC Company spent $400,000 to purchase equipment. The equipment was assigned a $10,000 residual value and a 20-year life. ABC Company will depreciate the equipment using the straight-line method. On January 1, 2025, ABC Company spent $37,000 to overhaul the equipment. This capital expenditure resulted in ABC Company changing the life of the equipment from 20 years to 30 years and adjusting the residual value to be $12,000 at the end of the 30 years. Calculate...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT