At the beginning of 2022, Robotics Incorporated acquired a manufacturing facility for $131 million $101 million of the purchase price was allocated to the building. Depreciation for 2022 and 2023 was calculated using the straight-line method, a 20-year useful life, and a $2.1 million residual value. In 2024, the company switched to the double-declining-balance depreciation method

At the beginning of 2022, Robotics Incorporated acquired a manufacturing facility for $131 million $101 million of the purchase price was allocated to the building. Depreciation for 2022 and 2023 was calculated using the straight-line method, a 20-year useful life, and a $2.1 million residual value. In 2024, the company switched to the double-declining-balance depreciation method

Name: Brief Exercise 11-15 (Algo) Change in principle; change in depreciati
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Description: Brief Exercise 11-15 (Algo) Change in principle; change in depreciation method [LO11-6]At the beginning of 2022, Robotics Incorporated acquired a manufacturing facility for $131 million $10.1 million of the purchase pricewas allocated to the buildin

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 4P: Cost of Asset and Depreciation Method Heist Company purchased a machine on January 2, 2019, and uses...

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Change in Estimate Assume that Bloomer Company purchased a new machine on January 1, 2016, for $80,000. The machine has an estimated useful life of nine years and a residual value of $8,000. Bloomer has chosen to use the straight-line method of depreciation. On January 1, 2018, Bloomer discovered that the machine would not be useful beyond December 31, 2021, and estimated its value at that time to be $2,000. Required Calculate the depreciation expense, accumulated depreciation, and book value of the asset for each year 2016 to 2021. Was the depreciation recorded wrong in 2016 and 2017? If so, why was it not corrected?
Expenditures After Acquisition Roanoke Manufacturing placed a robotic arm on a large assembly machine on January 1, 2019. At that time, the assembly machine was expected to last another 3 years. The following information is available concerning the assembly machine. The robotic arm cost $225,000 and was expected to extend the useful life of the machine by 3 years. Therefore, the useful life of the assembly machine, after the arm replacement, is 6 years. The assembly machine is expected to have a residual value of $120,000 at the end of its useful life. Required: 1. Prepare the journal entry necessary to record the addition of the robotic arm. 2. Compute 2019 depreciation expense for the machine using the straight-line method, and prepare the necessary journal entry. 3. What is the book value of the machine at the end of 2019? 4. CONCEPTUAL CONNECTION What would have been the effect on the financial statements if Roanoke had expensed the addition of the robotic arm?
Revision of Depreciation On January 1, 2017, Blizzards-R-Us purchased a snow-blowing machine for $125,000. The machine was expected to have a residual value of $12,000 at the end of its 5-year useful life. On January 1, 2019, Blizzards-R-Us concluded that the machine would have a remaining useful life of 6 years with a residual value of $3,600. Required: 1. Determine the revised annual depreciation expense for 2019 using the straight-line method. 2. CONCEPTUAL CONNECTION How does the revision in depreciation affect the Blizzards-R-Us financial statements?
Cost of Asset and Depreciation Method Heist Company purchased a machine on January 2, 2019, and uses the 150%-declining-balance depreciation method. The machine has an expected life of 10 years and an expected residual value of 5,000. The following costs relate to the acquisition and use of the machine during the first year of its operations: Required: 1. Compute the depreciation expense for 2019 and 2020. 2. Next Level What is the effect on the financial statements if the company used the straight-line method instead of the 150%-declining-balance method?
Exercises Required information Exercise 11-4 (Algo) Other depreciation methods [LO11-2] [The following information applies to the questions displayed below.] On January 1, 2021, the Allegheny Corporation purchased equipment for $343,000. The estimated service life of the equipment is 10 years and the estimated residual value is $24,000. The equipment is expected to produce 296,000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. Exercise 11-4 (Algo) Part 3 3. Assume instead the equipment was purchased on October 1, 2021. Calculate depreciation for 2021 and 2022 using each of the two methods. Partial-year depreciation is calculated based on the number of months the asset is in service. (Do not round intermediate answers and round your answers to the nearest whole dollar amount.) Sum-of-the-years' digits One hundred fifty percent declining balance $ 2021 12,863 2022
Required information Exercise 11-1 (Algo) Depreciation methods [LO11-2] [The following information applies to the questions displayed below.] On January 1, 2024, the Excel Delivery Company purchased a delivery van for $35,850. At the end of its five-year service life, it is estimated that the van will be worth $3,000. During the five-year period, the company expects to drive the van 109,500 miles. Required: Calculate annual depreciation for the five-year life of the van using each of the following methods. Exercise 11-1 (Algo) Part 3 3. Units of production using miles driven as a measure of output, and the following actual mileage: Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Depreciation Year Miles 2024 23,900 $ 2025 25,900 2026 16,900 2027 29,500 7,170 7,770 5,070 8,850 2028 15,300 Total $ 28,860
Exercise 11-3 (Aigo) Depreciation methods; partial periods [LUT1-2] The following information applies to the questions displayed below.] On October 1, 2024, the Allegheny Corporation purchased equipment for $233,000. The estimated service life of the equipment is 10 years and the estimated residual value is $2,000. The equipment is expected to produce 420,000 units during its life. Required: Calculate depreciation for 2024 and 2025 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service. Exercise 11-3 (Algo) Part 2 2. Double-declining-balance. Depreciation Expense = $ 11,650 Formula Beginning Book Value Double-Declining-Balance Method xDouble the Straight-line Rate X Fraction of Year = Amount for 2024 $ 233,000 x 20 % x 3/12 Amount for 2025 X 20 % * 12/12 =
Required information Exercise 11-3 (Algo) Depreciation methods partial periods [LO11-2] [The following information applies to the questions displayed below.] On October 1, 2021, the Allegheny Corporation purchased equipment for $148,000. The estimated service life of the equipment is 10 years and the estimated residual value is $5,000. The equipment is expected to produce 260,000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service. Exercise 11-3 (Algo) Part 2 2. Double-declining-balance. Formula Amount for 2021 Amount for 2022 Choose Numerator: Beginning Book Value Answer is not complete. Double-Declining-Balance Method X Choose Denominator: X Double the Straight-line Rate % % X X X x Fraction of Year Fraction of Year 3/12 12/12 › › Depreciation Expense Depreciation Expense
Required information Exercise 11-3 (Algo) Depreciation methods partial periods [LO11-2] [The following information applies to the questions displayed below.] On October 1, 2021, the Allegheny Corporation purchased equipment for $233,000. The estimated service life of the equipment is 10 years and the estimated residual value is $2,000. The equipment is expected to produce 420,000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service. Exercise 11-3 (Algo) Part 2 2. Double-declining-balance. X Answer is not complete. Double-Declining-Balance Method Fraction of Depreciation Expense Depreciation Expense Choose Numerator: Choose Denominator: !! Year Fraction of Year Formula Cost Minus Residual Straight-line Rate Amount for 2021 Amount for 2022 2$ 2 X x 3/12 11,650 %3D $ 2 X 10 X % 44,270 %3D
Required information Exercise 11-2 (Algo) Depreciation methods [LO11-2] [The following information applies to the questions displayed below.] On January 1, 2024, the Allegheny Corporation purchased equipment for $134,000. The estimated service life of the equipment is 10 years and the estimated residual value is $2,000. The equipment is expected to produce 240,000 units during its life. Required: Calculate depreciation for 2024 and 2025 using each of the following methods. Exercise 11-2 (Algo) Part 2 2. Double-declining-balance. Formula Amount for 2024 Amount for 2025 Beginning Book Value $ $ Double-Declining-Balance Method x Proportion of Units Produced 203,000 X 192,850 x = Depreciation Expense 20% = 20% =
! Required information Exercise 11-2 (Algo) Depreciation methods [LO11-2] [The following information applies to the questions displayed below.] On January 1, 2024, the Allegheny Corporation purchased equipment for $134,000. The estimated service life of the equipment is 10 years and the estimated residual value is $2,000. The equipment is expected to produce 240,000 units during its life. Required: Calculate depreciation for 2024 and 2025 using each of the following methods. Exercise 11-2 (Algo) Part 1 1. Straight-line. Formula Amounts 2024 2025 Choose Numerator: Annual Depreciation Straight-Line Depreciation + Choose Denominator: = II = = Annual Depreciation Annual Depreciation
Problem 11-11 (Algo) Error correction; change in depreciation method [LO11-2, 11-6, 11-7] Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $2,130,000. This cost figure included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance method was used to determine depreciation expense for 2022 and 2023. In 2024, after the 2023 financial statements were issued, the company decided to switch to the straight-line depreciation method for this equipment. At that time, the company's controller discovered that the original cost of the equipment incorrectly included one year of annual maintenance charges for the equipment. Required: 1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024. 2.…