Question

CC9-1 Accounting for the Use and Disposal of Long-Lived Assets [LO 9-3, LO 9-5]

[The following information applies to the questions displayed below.]

Nicole’s Getaway Spa (NGS) purchased a hydrotherapy tub system to add to the wellness programs at NGS. The machine was purchased at the beginning of the year at a cost of $25,000. The estimated useful life was five years and the residual value was $1,000. Assume that the estimated productive life of the machine is 10,000 hours. Expected annual production was year 1, 2,550 hours; year 2, 2,300 hours; year 3, 2,050 hours; year 4, 2,100 hours; and year 5, 1,000 hours.

References

Section BreakCC9-1 Accounting for the Use and Disposal of Long-Lived Assets [LO 9-3, LO 9-5]

9.

value:
1.81 points

Required information

CC9-1 Part 1

Required:

1.	Complete a depreciation schedule for each of the alternative methods. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)

a.	Straight-line.

b.	Units-of-production.

c.	Double-declining-balance.

References

WorksheetDifficulty: 3 HardLearning Objective: 09-05 Analyze the disposal of long-lived tangible assets.

CC9-1 Part 1Learning Objective: 09-03 Apply various depreciation methods as economic benefits are used up over time.

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10.

value:
1.81 points

Required information

CC9-1 Part 2

2.

Assume NGS sold the hydrotherapy tub system for $7,500 at the end of year 3. Prepare the journal entry to account for the disposal of this asset under the three different methods. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Round your final answers to the nearest dollar amount.)

References

WorksheetDifficulty: 3 HardLearning Objective: 09-05 Analyze the disposal of long-lived tangible assets.

CC9-1 Part 2Learning Objective: 09-03 Apply various depreciation methods as economic benefits are used up over time.

Ask your instructor a questionCheck my work

11.

value:
1.90 points

Required information

CC9-1 Part 3

3.

The following amounts were forecast for year 3: Sales Revenues $62,000; Cost of Goods Sold $48,000; Other Operating Expenses $4,800; and Interest Expense $1,000. Create an income statement for year 3 for each of the different depreciation methods, ending at Income before Income Tax Expense. (Don't forget to include a loss or gain on disposal for each method.). (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

Answer 1