Question

Mike's Company purchased equipment that cost $118,000 on August
1, 2018. The equipment has an estimated useful life of eight years
with an estimated salvage of $10,000. Mike's Company has a December
31 year-end. Calculate the following, showing all of your
computations well-labeled and in good form under each of the
following*independent scenarios*:

1. The equipment is depreciated using machine hours. The machine is expected to be used for a total of 110,000 hours over it estimated useful life. The following hours of usage were recorded in 2018, 2019, and 2020:

2018 2019 2020

6,000 hours 13,000 hours 12,000 hours

(a) Calculate the depreciation for 2019 using the above data.
Round to the nearest hundredth.

(b) Calculate the book value on the machine at December 31,
2020.

Straight-line method.

(a) Calculate the depreciation for 2019 using the above
data.

(b) Calculate the book value on the machine at December 31,
2020.

Sum-of-the-years’ digits method

(a) Calculate the depreciation for 2019 using the above data.

(b) Calculate the book value on the machine at December 31, 2019.

Double declining-balance method. Round your calculations to the nearest dollar.

(a) Calculate the depreciation for 2019 using the above
data.

(b) Calculate the book value on the machine at December 31,
2019.

Answer #1

Exercise #3: Partial-Period Depreciation
On May 1, 2019, Waters Company purchased equipment for $271,000.
The estimated service life of the equipment is six years and the
estimated residual value is $19,000. Waters’ fiscal year ends on
December 31.
Required: Calculate depreciation of the
equipment for fiscal years 2019 and 2020, as well as the book value
at December 31, 2020, using each method shown below. Round
calculations to the nearest whole dollar.
Straight-Line:
Double-Declining Balance:
Sum-of-the-Years’-Digits:

On January 1, 2018, a machine was purchased for $105,000. The
machine has an estimated salvage value of $8,100 and an estimated
useful life of 5 years. The machine can operate for 114,000 hours
before it needs to be replaced. The company closed its books on
December 31 and operates the machine as follows: 2018, 22,800 hrs;
2019, 28,500 hrs; 2020, 17,100 hrs; 2021, 34,200 hrs; and 2022,
11,400 hrs.
Compute the annual depreciation charges over the machine’s life
assuming...

A company purchased factory equipment on April 1, 2018 for
$166000. It is estimated that the equipment will have a $18000
salvage value at the end of its 10-year useful life. Using the
straight-line method of depreciation, the amount to be recorded as
depreciation expense at December 31, 2018 is

Stacey Ltd purchased a new machine on 1 September
2019 at a cost of $251,200 (excluding GST).
The entity estimated that the machine has a
residual value of $28,600 (excluding GST).
The machine is expected to be used for 42,000
working hours during its 10 year life
Assume a 31 December
year-end.
Required
(a) Calculate the depreciation expense using the straight-line method for 2019 and 2020.
(b) Calculate the depreciation expense using the diminishing-balance method and a depreciation rate...

Stacey Ltd purchased a new machine on 1 September 2019 at a
cost of $243,000 (excluding GST).
The entity estimated that the machine has a residual value of
$28,800 (excluding GST).
The machine is expected to be used for 42,000 working hours
during its 10 year life
Assume a 31 December year-end.
Required
(a) Calculate the depreciation expense using the straight-line
method for 2019 and 2020.
(b) Calculate the depreciation expense using the
diminishing-balance method and a...

On January 1, 2018, Canseco Plumbing Fixtures purchased
equipment for $36,000. Residual value at the end of an estimated
four-year service life is expected to be $6,000. The company
expects the machine to operate for 20,000 hours. The machine
operated for 2,500 and 3,300 hours in 2018 and 2019,
respectively.
a. Calculate depreciation expense for 2018 and
2019 using straight line method.
b. Calculate depreciation expense for 2018 and
2019 using sum-of-the-years'-digits method.
c. Calculate depreciation expense for 2018 and...

On January 1, 2018, Canseco Plumbing Fixtures purchased
equipment for $56,000. Residual value at the end of an estimated
four-year service life is expected to be $2,000. The company
expects the machine to operate for 15,000 hours. The machine
operated for 3,500 and 4,300 hours in 2018 and 2019,
respectively.
a. Calculate depreciation expense for 2018 and
2019 using straight line method.
b. Calculate depreciation expense for 2018 and
2019 using sum-of-the-years'-digits method.
c. Calculate depreciation expense for 2018 and...

1. On January 1, 2018, Sanderson Company acquired a machine for
$1,060,000.
The estimated useful life of the asset is five years. Residual
value at the end of five years is estimated to be $109,000.
What is the book value of the machine at the end of 2019 if the
company uses the straight−line
method of depreciation?
2. An asset was purchased for $33,000 on January 1, 2019. The
asset's estimated useful life was five years, and its residual
value...

On January 1, 2018, Canseco Plumbing Fixtures purchased
equipment for $64,000. Residual value at the end of an estimated
four-year service life is expected to be $10,000. The company
expects the machine to operate for 10,000 hours. The machine
operated for 3,900 and 4,700 hours in 2018 and 2019, respectively.
Calculate depreciation expense for 2018 and 2019 using straight
line method. Calculate depreciation expense for 2018 and 2019 using
sum-of-the-years'-digits method. Calculate depreciation expense for
2018 and 2019 using double-declining...

On March 31, 2018, Canseco Plumbing Fixtures purchased equipment
for $44,000. Residual value at the end of an estimated four-year
service life is expected to be $8,000. The company expects the
machine to operate for 20,000 hours. a. Calculate depreciation
expense for 2018 and 2019 using straight line method. b. Calculate
depreciation expense for 2018 and 2019 using
sum-of-the-years’-digits method. c. Calculate depreciation expense
for 2018 and 2019 using double-declining balance method.

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