Question

Question 1.) On July 1, 2020, Soprano Company purchased 10 computers with an invoice price of...

Question 1.) On July 1, 2020, Soprano Company purchased 10 computers with an invoice price of $50,000. Other costs incurred were sales tax $2,100, Freight $300, installation of $2,300, testing of $300, and prepaid insurance to cover the computers; $3,600. The computers are estimated to have a 5-year life and $5,000 salvage value.

Instructions:

  1. Find the cost of new computers.       
  2. What is depreciation for 2020 and 2021 if the company uses the double-declining balance method?:
      
    2020 Depreciation?:

    2021 Depreciation?:

Question 2.) A company purchased factory equipment for $700,000 on November 1, 2020. It is estimated that the equipment will have a $70,000 salvage value at the end of its estimated 5-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be (Round to whole dollars if necessary)

Homework Answers

Answer #1

Question 1 :

All the cost which requires to put the asset in use should be capitalized.

Computers =

Invoice price = 50,000

Sales tax = 2100

Freight = 300

Installation = 2300

Testing = 300

Total cost of machine = 55,000.

(Insurance expense should not be capitalized)

Estimated life = 5 years

Double declinind method rate = 2 ( Straight line basis rate)

= 2 (1/ 5 years) = 2 (20%) = 40%.

For accounting purpose, Depreciation for July to December recorded in year 2020.

Depreciation for 2020 = 55,000 × 40% × 6/12 = 11,000.

Balance after 2020 = 55000 - 11000 = 44,000.

Depreciation for 2021 = 44,000 ×40% = 17,600.

Question 2 :

Same as above rate of depression of double declining method is 40%.

Depreciation 2020 = 700,000 × 40% × 2/12 = 46667

Balance at year end 2020 = 700,000 - 46667 = 653,333.

Depreciation for 2021 = 653,333 × 40% = 261,333.

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 July 1, 2020, Flint Company purchased for $3,960,000 snow-making equipment having an estimated useful life...
On July 1, 2020, Flint Company purchased for $3,960,000 snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of $165,000. Depreciation is taken for the portion of the year the asset is used. (a) Complete the form below by determining the depreciation expense and year-end book values for 2020 and 2021 using the 1. sum-of-the-years'-digits method. 2. double-declining balance method.
Bramble Company purchased equipment on January 1, 2020 at a total invoice cost of $347000; additional...
Bramble Company purchased equipment on January 1, 2020 at a total invoice cost of $347000; additional costs of $5000 for freight and $32000 for installation were incurred. The equipment has an estimated salvage value of $11000 and an estimated useful life of five years. The amount of accumulated depreciation at December 31, 2021 if the straight-line method of depreciation is used is: $136400. $153600. $134400. $149200.
Depreciation of assets On January 1, 2020, a company purchased and placed in service some manufacturing...
Depreciation of assets On January 1, 2020, a company purchased and placed in service some manufacturing equipment with a cost of $480,000. The company estimated the machine's useful life to be 5 years or 100,000 units of output with an estimated salvage value of $80,000. During the second year, 18,000 units were produced. What is the depreciation for the second year of the machine’s useful life, assuming the company uses: a. The straight-line method of depreciation b. The units-of-production method...
1.   Presto Company purchased equipment and these costs were incurred: Cash price $65,000 Sales taxes 3,600...
1.   Presto Company purchased equipment and these costs were incurred: Cash price $65,000 Sales taxes 3,600 Insurance during transit 640 Installation and testing  860 Total costs $70,100 Presto will record the acquisition cost of the equipment as a. $65,000. b. $68,600. c. $69,240. d. $70,100. 2. A company purchased factory equipment on April 1, 2015 for $160,000. It is estimated that the equipment will have a $20,000 salvage value at the end of its 10-year useful life. Using the straight-line method...
Windsor Company purchased a new plant asset on April 1, 2020, at a cost of $735,000....
Windsor Company purchased a new plant asset on April 1, 2020, at a cost of $735,000. It was estimated to have a service life of 20 years and a salvage value of $58,800. Windsor’ accounting period is the calendar year. PLEASE SHOW WORK Compute the depreciation for this asset for 2020 and 2021 using the sum-of-the-years'-digits method. (Round answers to 0 decimal places, e.g. 45,892.) Depreciation for 2020 $enter a dollar amount Depreciation for 2021 $enter a dollar amount Compute...
Sunland Company purchased a new plant asset on April 1, 2020, at a cost of $750,000....
Sunland Company purchased a new plant asset on April 1, 2020, at a cost of $750,000. It was estimated to have a service life of 20 years and a salvage value of $61,200. Sunland’ accounting period is the calendar year. Compute the depreciation for this asset for 2020 and 2021 using the sum-of-the-years'-digits method. (Round answers to 0 decimal places, e.g. 45,892.) Depreciation for 2020 $enter a dollar amount Depreciation for 2021 $enter a dollar amount eTextbook and Media   ...
On January 2, 2018, the Jackson Company purchased equipment to be used in its manufacturing process....
On January 2, 2018, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $45,250. The expenditures made to acquire the asset were as follows: Purchase price $ 203,500 Freight charges 5,600 Installation charges 8,500 Jackson’s policy is to use the double-declining-balance (DDB) method of depreciation in the early years of the equipment’s life and then switch to straight line halfway through the...
Q4) JKL Company purchased manufacturing equipment on January 1, 2018 for $13,000. Additionally, costs of $1,000...
Q4) JKL Company purchased manufacturing equipment on January 1, 2018 for $13,000. Additionally, costs of $1,000 for transportation of the equipment to JKL’s factory, $2,000 for installation of the equipment and 1,500 for advertising to hire operators for the equipment, were incurred by JKL. A useful life of 4 years and a residual value of $1,200 are estimated for the truck Calculate depreciation expense and book value for 2018, 2019, 2020 and 2021, assuming the double declining-balance method of depreciation...
Exercise 11-03 Oriole Company purchased a new plant asset on April 1, 2020, at a cost...
Exercise 11-03 Oriole Company purchased a new plant asset on April 1, 2020, at a cost of $771,000. It was estimated to have a service life of 20 years and a salvage value of $65,400. Oriole’ accounting period is the calendar year. Your answer is incorrect. Try again. Compute the depreciation for this asset for 2020 and 2021 using the sum-of-the-years'-digits method. (Round answers to 0 decimal places, e.g. 45,892.) Depreciation for 2020 $enter a dollar amount Depreciation for 2021...
On January 1, 2017, Sandhill Company purchased a building and equipment that have the following useful...
On January 1, 2017, Sandhill Company purchased a building and equipment that have the following useful lives, salvage values, and costs. Building, 40-year estimated useful life, $49,200 salvage value, $828,000 cost Equipment, 12-year estimated useful life, $11,200 salvage value, $99,400 cost The building has been depreciated under the double-declining-balance method through 2020. In 2021, the company decided to switch to the straight-line method of depreciation. Sandhill also decided to change the total useful life of the equipment to 9 years,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT