Question

2. Red Skys, Inc. purchased equipment at the beginning of 2016 for $140,000. The company decided...

2. Red Skys, Inc. purchased equipment at the beginning of 2016 for $140,000. The company decided to depreciate the equipment over a 10-year period using the double-declining-balance method. The company estimated the equipment's salvage value at $12,000. Show how the costs should be presented on Red Sky's financial statements at December 31, 2017. Label the statements properly.

Homework Answers

Answer #1

Double declining depreciation rate=2/useful life

                  = 2 / 10.

                  = .20 or 20%

Depreciation for 2016 = 140000*.20 = 28000

Book value at end of 2016 = 140000-28000 = 112000

Depreciation for 2017 = 112000 *.20 = 22400

Book value at end of 2017 = 112000-22400 = 89600

Income statement (Partial)

for the period ended 2017

Operating expense
Depreciation expense (22400)

Balance sheet

as on 2017

Asset
property plant and equipment
Equipment 140000
less:Accumulated depreciation [28000+22400] (50400) 89600
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 May 1, 2016, Lion, Inc. purchased equipment for $110,000 cash. Lion estimates that the equipment...
On May 1, 2016, Lion, Inc. purchased equipment for $110,000 cash. Lion estimates that the equipment will have a salvage value of $8,000 and a useful life of 7 years. Lion is on a calendar year basis ending December 31. Required: Compute the depreciation expense under each of the following methods for 2016 and 2017. Straight line method for 2016 and 2017 Sum of the years digits method for 2016 and 2017 Double Declining balance method for 2016 and 2017
On January 1, 2016, Shoreham, Inc. acquired an equipment for $45,600. The estimated life of the...
On January 1, 2016, Shoreham, Inc. acquired an equipment for $45,600. The estimated life of the equipment is 6 years, with an estimated residual value of $2,400. In its financial statements, Shoreham uses double-declining-balance depreciation. The book value of the equipment at December 31, 2017, will be: $25,333 $20,762 $20,267 $12,667
Case E. Matson Company purchased the following on January 1, 2016:      • Office equipment at...
Case E. Matson Company purchased the following on January 1, 2016:      • Office equipment at a cost of $42,000 with an estimated useful life to the company of three years and a residual value of $12,600. The company uses the double-declining-balance method of depreciation for the equipment. • Factory equipment at an invoice price of $806,800 plus shipping costs of $22,000. The equipment has an estimated useful life of 112,000 hours and no residual value. The company uses the...
On January 1, 2016, Sparks Company purchased for $360,000 snow-making equipment having an estimated useful life...
On January 1, 2016, Sparks Company purchased for $360,000 snow-making equipment having an estimated useful life of 8 years with an estimated salvage value of $25,000 and 500,000 units expected to be produced. 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 of 2015 and 2016 using the 1. Straight Line Method 2. Production assuming 50,000 units produced in 2016 and 60,000...
On January 1, 2016, Walid Company purchases equipment for $12,000 with 4 years estimated useful life...
On January 1, 2016, Walid Company purchases equipment for $12,000 with 4 years estimated useful life and no salvage value. On December 31, 2019, Walid Company retires the equipment. The straight-line method of depreciation is applied and financial statements are prepared yearly. The retirement entry is: *
Granzatto, Inc. acquired the following assets in January 2015: Equipment, estimated service life, 5 years; no...
Granzatto, Inc. acquired the following assets in January 2015: Equipment, estimated service life, 5 years; no salvage value $650,000 Building, estimated service life, 40 years; salvage value, $500,000 $5,500,000 The equipment has been depreciated using the double-declining balance method for the first 2 years for financial reporting purposes. In 2017, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value....
Leahy Company purchased equipment at the beginning of the year for $400,000. The company decided to...
Leahy Company purchased equipment at the beginning of the year for $400,000. The company decided to depreciate the equipment using the straight-line method. Which of the following is one effect of recognizing depreciation expense during the year? A. Accumulated Depreciation increases and shareholders' equity decreases. B. Shareholders' equity and the Equipment account decrease. C. Accumulated Depreciation increases and the Equipment account decreases. D. Total expenses and the book value of the depreciated equipment increase.
On July 2, 2017, Vicuna Inc. purchased equipment for $720,000. This equipment has an estimated useful...
On July 2, 2017, Vicuna Inc. purchased equipment for $720,000. This equipment has an estimated useful life of six years and an estimated residual value of $30,000. Depreciation is taken for the portion of the year the asset is used. The asset is a Class 8 asset with a maximum CCA rate of 20%. Vicuna has a December year end. Instructions a) Complete the form below by determining the depreciation expense/CCA and year-end book values/UCC for 2017 and 2018 using...
1.Trouble Company purchased equipment on January 1, 2016, for $60,000. It is estimated that the equipment...
1.Trouble Company purchased equipment on January 1, 2016, for $60,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 100,000 units over its 5-year life. Compute depreciation expense for 2016 using the straight-line method of depreciation. 2. Adriane’s Grocery Store had a beginning inventory of $14,000 and an ending inventory of $19,000. Net sales during the year amounted to $78,000...
Martin Company purchases a machine at the beginning of the year at a cost of $140,000....
Martin Company purchases a machine at the beginning of the year at a cost of $140,000. The machine is depreciated using the double-declining-balance method. The machine’s useful life is estimated to be 4 years with a $11,600 salvage value. The machine’s book value at the end of year 3 is: Multiple Choice a. $70,000. b. $105,000. c. $122,500. d. $17,500. e. $16,025.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT