Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 13, Problem 20E
Exercise 6-20A Asset replacement decision
Kahn Company paid $240,000 to purchase a machine on January 1, 2017. During 2019, a technological breakthrough resulted in the development of a new machine that costs $300,000. The old machine costs $100,000 per year to operate, but the new machine could be operated for only $36,000 per year. The new machine, which will be available for delivery on January 1, 2019, has an expected useful life of four years. The old machine is more durable and is expected to have a remaining useful life of four years. The current market value of the old machine is $80,000. The expected salvage value of both machines is zero.
Required
Based on this information, recommend whether to replace the machine. Support your recommendation with appropriate computations.
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Exercise One
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At the end of production at the mine, the company estimates it will have to spend $150,000 to restore the
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During the last six months of 2022, 100,000 tonnes of ore were mined and sold.
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a) Prepare the journal entry to record the depletion expense.
Date
Particulars
Debit
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The cost of equipment purchased by Swifty, Inc., on June 1, 2025, is $100,800. It is estimated that the machine will have a
$8,400 salvage value at the end of its service life. Its service life is estimated at 7 years, its total working hours are estimated at 46,200,
and its total production is estimated at 660,000 units. During 2025, the machine was operated 6,240 hours and
produced 57,200 units. During 2026, the machine was operated 5,720 hours and produced 49,900 units.
Compute depreciation expense on the machine for the year ending December 31, 2025, and the year ending December 31, 2026,
using the following methods. (Round depreciation per unit to 2 decimal places, e.g. 15.25 and final answers to O decimal places, e.g. 45,892.)
b.
d.
Straight-line
Units-of-output
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Sum-of-the-years'-digits
e. Double-declining-balance
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2025
$
$
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2026
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On October 1, 2022, Cullumber Manufacturing Company purchased a piece of high-tech equipment for $90,500 cash. Cullumber
estimated the equipment would have a 8-year useful life and a residual value of $8,900. The company uses straight-line depreciation
and has a September 30 fiscal year end.
On October 1, 2024, Cullumber paid $15,100 cash to upgrade the equipment. It is expected that the upgrade will significantly reduce
the operating costs of the equipment. Cullumber also reviewed the equipment's expected useful life and estimated that, due to
changing technology, the equipment's total expected useful life will be 6 years and its residual value will be $4,600.
Calculate the annual depreciation expense for the first two years of the equipment's life.
Annual depreciation expense $
List of Accounts
Calculate the carrying amount of the equipment at September 30, 2024.
Carrying amount
List of Accounts
per year
$
Chapter 13 Solutions
Survey Of Accounting
Ch. 13 - Prob. 1QCh. 13 - Prob. 2QCh. 13 - Prob. 3QCh. 13 - Prob. 4QCh. 13 - Prob. 5QCh. 13 - Prob. 6QCh. 13 - Prob. 7QCh. 13 - Prob. 8QCh. 13 - Prob. 9QCh. 13 - Prob. 10Q
Ch. 13 - Prob. 11QCh. 13 - Prob. 12QCh. 13 - Prob. 13QCh. 13 - Prob. 14QCh. 13 - Prob. 15QCh. 13 - Prob. 16QCh. 13 - Prob. 17QCh. 13 - Prob. 18QCh. 13 - Prob. 19QCh. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - Prob. 3ECh. 13 - Prob. 4ECh. 13 - Exercise 6-5AOpportunity costs Norman Dowd owns...Ch. 13 - Prob. 6ECh. 13 - Prob. 7ECh. 13 - Prob. 8ECh. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - Exercise 6-11AEstablishing price for an...Ch. 13 - Exercise 6-12AOutsourcing decision with...Ch. 13 - Exercise 6-13AOutsourcing decision affected by...Ch. 13 - Prob. 14ECh. 13 - Exercise 6-15ASegment elimination decision Dudley...Ch. 13 - Prob. 16ECh. 13 - Exercise 6-17AAsset replacementopportunity cost...Ch. 13 - Prob. 18ECh. 13 - Exercise 6-19A Asset replacement decision Mead...Ch. 13 - Exercise 6-20A Asset replacement decision Kahn...Ch. 13 - Exercise 6-21A Annual versus cumulative data for...Ch. 13 - Problem 6-23A Context-sensitive relevance Required...Ch. 13 - Problem 6-24A Context-sensitive relevance...Ch. 13 - Problem 6-25A Effect of order quantity on special...Ch. 13 - Problem 6-26A Effects of the level of production...Ch. 13 - Problem 6-28A Eliminating a segment Western Boot...Ch. 13 - Effect of activity level and opportunity cost on...Ch. 13 - Problem 6-30A Comprehensive problem including...Ch. 13 - Prob. 29PCh. 13 - ATC 6-1 Business Application Case Analyzing...Ch. 13 - ATC 6-2 Group Assignment Relevance and cost...Ch. 13 - Prob. 3ATCCh. 13 - Prob. 4ATCCh. 13 - Prob. 5ATC
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