The Costanza Corporation purchased some equipment August 1, 2021 for $17,040 and expects to use it for 8 years at which time it can be sold for an estimated $1,200. How much depreciation expense would be recorded in the company's 2021 financial statements?
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- Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation is recorded?Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.Cutter Enterprises purchased equipment for $78,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $6,600. Using the straight-line method, depreciation for 2022 and the equipment's book value at December 31, 2022, would be:
- On March 10, 2027, Skysong Company sells equipment that it purchased for $203,520 on August 20, 2020. It was originally estimated that the equipment would have a life of 12 years and a salvage value of $17,808 at the end of that time, and depreciation has been computed on that basis. The company uses the straight-line method of depreciation. (a) Compute the depreciation charge on this equipment for 2020, for 2027, and the total charge for the period from 2021 to 2026, inclusive, under each of the six following assumptions with respect to partial periods. (Round depreciation per day to 2 decimal places, e.g. 15.64 and final answers to O decimal places, e.g. 45,892.) 1. Depreciation is computed for the exact period of time during which the asset is owned. (Use 365 days for base and record depreciation through March 9, 2027.) 2. Depreciation is computed for the full year on the January 1 balance in the asset account. 3. 4. Depreciation for one-half year is charged on plant assets acquired…On Jan. 1, 2021, Mother, Inc., whose financial year end is every Dec. 31, purchased a unit of equipment at a total cost of P10,000,000. The equipment is estimated to have a useful life of 5 years with a residual value equal to 10% of its cost. - How much is the depreciation expense for 2021 using the straight line depreciation method? - How much is the depreciation expense for 2024 using the SYD depreciation method? - How much is the depreciation expense for 2025 using the double declining balance depreciation method?Oxtongue Limited paid $135,000 to purchase equipment at the beginning of 2020. Oxtongue Limited estimated the useful life of the equipment to be 4 years or 200,000 units. The equipment will be considered fully amortized when the balance in the Accumulated Depreciation account reaches $ 120,000. The equipment produced 52,000 units in 2023. Required Determine the estimated residual value of the equipment. What is the depreciablecost of the equipment? 3. Calculate the depreciation expense for 2023 under each of the following methods: a. straight-line b. units-of-production c. double- diminishing-balance
- Ariel Company purchased a boring machine on January 1, 2020 for P8,100,000. The useful life of the machine is estimated at three years with a residual value of P600,000. During the useful life, the expected units of production from the machine are 10,000 units for 2020, 9,000 units for 2021 and 6,000 units for 2022. What is the depreciation expense for 2021 using the most appropriate depreciation method?On January 1, 2021, Concord Corporation purchased equipment for $20000. The company is depreciating the equipment at the rate of $800 per month. At January 31, 2022, the balance in Accumulated Depreciation is: $800 debit. $10400 credit. $49600 debit. $9600 credit.In March 2022, Jones Company purchased a Mercedes for use in its business at a cost of $73,000. Required: Assuming no bonus depreciation or Section 179 deduction, calculate the allowable tax depreciation on this asset for 2022, 2023, and 2024. Use Table 7-1 and Table 7-2. Use the below table for annual depreciation deduction for year 2022 to 2025: 2022 2023 2024 2025 and subsequent years 2022 depreciation 2023 depreciation 2024 depreciation Amount $ 11,200 18,000 10,800 6,460
- EMSN Corp. purchased PPE on January 1, 2020 for $7,221,000. The production estimates the asset will be used for 5 years, after which it can be sold for $578,000 based on these estimates, what is the depreciation expense in 2021 on this asset if the ompann-of-the-year's-digits method for calculating depreciation? 2,214,333 1,771,467 $1,328,600 There is not enough information to answer this question. On July 1, 2020, Bodhi purchased equipment for $4,295,000. The salvage value of the equipment is estimated to be $515,000 and the management team believes that the equipment can be used for 5 years. Assuming the company uses the straight line method and follows FASB's preferences for recording partial year depreciation, what should the company record as depreciation expense in 2020? 378,000 $ 756,000 $3,539,000 $3,917,000 Which of the following would be considered a capital expenditure? (A 22) O Making a payment on accounts payable O Paying accumulated income taxes O Paying shipping…Concord Corporation, which has a calendar year accounting period, purchased a new machine for $95400 on April 1, 2016. At that time Concord expected to use the machine for nine years and then sell it for $9540. The machine was sold for $50800 on Sept. 30, 2021. Assuming straight-line depreciation, no depreciation in the year of acquisition, and a full year of depreciation in the year of retirement, the gain to be recognized at the time of sale would be O $3100. O $0. O $9540. O $5100. O O OOn September 30, 2021, Shamille Company purchased machinery for P7,600,000. Residual value was estimated to be P400,000. The machinery is depreciated over eight years using the sum of years' digits method. What amount should be recorded as depreciation for 2022?