Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 6, Problem 6.3ME
Mini-Exercise 6.3
LO 3
Required:
- Using straight-line depreciation, calculate the depreciation expense to be recognized for 2016, the first year of the equipment’s life, and calculate the equipment’s net book value at December 31, 2018, after the third year of the equipment’s life.
- Using declining-balance depreciation at twice the straight-line rate, calculate the depreciation expense to be recognized for 2018, the third year of the equipment’s life.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Question 1
On January 1, 2014, Evers Company purchased the following machine for use in its production process:
Machine: The recorded cost of this machine was $180,000. Evers estimates that the useful life of the
machine is 4 years with a $10,000 salvage value remaining at the end of that time period.
Instructions
a) Calculate the amount of depreciation expense that Evers should record each year of its useful life under
the following assumptions. Show your workings.
(1) Straight-line method
(2) Double declining balance method
(3) Units-of-activity method and estimates that the useful life of machine is 125,000 units. Actual
usage is as follows: 2014, 45,000 units; 2015, 35,000 units; 2016, 25,000 units; 2017, 20,000
units.
b) Which method used to calculate depreciation reports the highest amount of depreciation expense
year 1? The highest in year 4? The highest total amount over the 4-year period?
in
Depreciation calculation methods Gandolfi Construction Co. purchased a used CAT 336DL earth mover at a cost of $500,000 in January 2016. The company’s estimated useful life of this heavy equipment is 10 years, and the estimated salvage value is $100,000.Required:a. Using straight-line depreciation, calculate the depreciation expense to be recognized for 2016, the first year of the equipment’s life, and calculate the equipment’s net book value at December 31, 2018, after the third year of the equipment’s life.b. Using declining-balance depreciation at twice the straight-line rate, calculate the depreciation expense to be recognized for 2018, the third year of the equipment’s life.
O 3Depreciation calculation methods Millco, Inc., acquired a machine that cost $1,200,000 early in 2016. The machine is expected to last for eight years, and its estimated salvage value at the end of its life is $180,000.Required:a. Using straight-line depreciation, calculate the depreciation expense to be recognized in the first year of the machine’s life and calculate the accumulated depreciation after the fifth year of the machine’s life.b. Using declining-balance depreciation at twice the straight-line rate, calculate the depreciation expense for the third year of the machine’s life.c. What will be the net book value of the machine at the end of its eighth year of use before it is disposed of, under each depreciation method?
Chapter 6 Solutions
Accounting: What the Numbers Mean
Ch. 6 - Prob. 6.1MECh. 6 - Prob. 6.2MECh. 6 - Mini-Exercise 6.3 LO 3 Depreciation calculation...Ch. 6 - Prob. 6.4MECh. 6 - Mini-Exercise 6.5 LO 9 Goodwill Backstreets Co....Ch. 6 - Prob. 6.6MECh. 6 - Exercise 6.7 LO 1 Basket purchase allocation...Ch. 6 - Prob. 6.8ECh. 6 - Prob. 6.9ECh. 6 - Prob. 6.10E
Ch. 6 - Exercise 6.11 LO 3 Effect of depreciation on ROI...Ch. 6 - Exercise 6.12 LO 3 Financial statement effects of...Ch. 6 - Exercise 6.13 LO 3 Depreciation calculation...Ch. 6 - Exercise 6.14 LO 3 Depreciation calculation...Ch. 6 - Prob. 6.15ECh. 6 - Prob. 6.16ECh. 6 - Prob. 6.17ECh. 6 - Exercise 6.18 LO 9 Goodwill-effect on ROI and...Ch. 6 - Exercise 6.19 LO 6, 8, 9 Transaction...Ch. 6 - Exercise 6.20 LO 3, 4, 6, 8 Transaction...Ch. 6 - Prob. 6.21PCh. 6 - Prob. 6.22PCh. 6 - Prob. 6.23PCh. 6 - Problem 6.24 LO 3 Partial-year depreciation...Ch. 6 - Problem 6.25
LO 3
Identify depreciation methods...Ch. 6 - Prob. 6.26PCh. 6 - Prob. 6.27PCh. 6 - Prob. 6.28PCh. 6 - Prob. 6.29PCh. 6 - Prob. 6.30PCh. 6 - Prob. 6.31PCh. 6 - Prob. 6.32PCh. 6 - Prob. 6.33CCh. 6 - Prob. 6.34CCh. 6 - Case 6.35 LO 3, 6 Capstone analytical review of...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Depreciation calculation methods Millco, Inc., acquired a machine that cost $1,200,000 early in 2016. The machine is expected to last for eight years, and its estimated salvage value at the end of its life is $180,000. Required: a. Using straight-line depreciation, calculate the depreciation expense to be recognized in the first year of the machine's life and calculate the accumulated depreciation after the fifth year of the machine's life.arrow_forwardCurrent Attempt in Progress X Your answer is incorrect. Metlock Company purchased equipment for $285,600 on October 1, 2025. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $12,000. Estimated production is 48,000 units and estimated working hours are 19,000. During 2025, Metlock uses the equipment for 530 hours and the equipment produces 1,100 units. Compute depreciation expense under each of the following methods. Metlock is on a calendar-year basis ending December 31. (Round rate per hour and rate per unit to 2 decimal places, e.g. 5.35 and final answers to O decimal places, e.g. 45,892.) (a) (b) (c) Straight-line method for 2025 (e) Activity method (units of output) for 2025 Activity method (working hours) for 2025 (d) Sum-of-the-years'-digits method for 2027 Double-declining-balance method for 2026 $ ta tA LA 8531 5.69 7615 51187 66797arrow_forwardExercise 6-15 (Algo) Depreciation calculation methods LO 6-3 Millco Incorporated acquired a machine that cost $408,000 early in 2022. The machine is expected to last for eight years, and its estimated salvage value at the end of its life is $62,000. Required: a. Using straight-line depreciation, calculate the depreciation expense to be recognized in the first year of the machine's life and calculate the accumulated depreciation after the fifth year of the machine's life. b. Using declining-balance depreciation at twice the straight-line rate, calculate the depreciation expense for the third year of the machine's life. c. What will be the net book value of the machine at the end of its eight year of use before it is disposed of, under each depreciation method? Complete this question by entering your answers in the tabs below. Req A to B Req C a. Using straight-line depreciation, calculate the depreciation expense to be recognized in the first year of the machine's life and calculate the…arrow_forward
- Problem 4 The following information pertains to Bosh Inc.'s depreciable assets: • Machine Y cost P525,000 and was acquired on January 1, 2016. On the acquisition date, the expected useful life was 12 years with no residual value. The straight line method was used. On January 1, 2020, it was estimated that the remaining life of the asset would be 4 years and that there would be a P25,000 residual value. • A building was purchased on January 1, 2017 for P3,000,000. The building was expected to have a useful life of 20 years with no residual value. The straight line depreciation method was used. On January 1, 2020, a change was made to the sum-of-the-years'-digits method of depreciation. No change was made to the estimated useful life and residual value of the building. _3. What is the depreciation expense of Machine Y for 2020? _4. What is the depreciation expense of building for 2022?arrow_forwardView Policies Current Attempt in Progress Teal Mountain Inc. purchased a tractor trailer for $152000. Teal Mountain uses the units-of-activity method for depreciating its trucks and expects to drive the truck 1000000 miles over its 12-year useful life. Salvage value is estimated to be $16000. If the truck is driven 76000 miles in its first year, how much depreciation expense should Teal Mountain record? O $11721. O $10336. O $11552. O $9589. Save for Later Attempts: 0 of 1 used Submit Answerarrow_forwardCalculate the depreciation expense in the year of 2014 by using Straight line method Asif Company acquired machinery on January 1, 2014 with an amount AED84,000. The useful life of the machinery is expected to be 4 years. The salvage value at the end of the life of the machinery is expected to be AED4,000. The machinery can produce maximum 80,000 units during its useful life.arrow_forward
- Q.4 Swanson & Hiller, Inc., purchased a new machine on September 1, 2008 at a cost of $108,000. The machine’s estimated useful life at the time of the purchase was five years, and its residual value was $8,000. Instructions a. Prepare a complete depreciation schedule, beginning with calendar year 2008, under each of the methods listed below (assume that the half-year convention is used): 1. Straight-line. 2. 200 percent declining-balance. 3. 150 percent declining-balance, switching to straight-line when that maximizes the expense.arrow_forward32 Assume that on 31st December 2014 Ali and Sons Company purchased a machine for OMR 20000 and expecting the salvage value after its useful life of 5 years is OMR 2000. Calculate the book value of the machine on 31st December 2018 by following Straight line depreciation method. a. OMR 5600 b. OMR 14000 c. OMR 9200 d. OMR 2000 Clear my choicearrow_forwardQ: On January 2, 2011, Jansing Corporation acquired a new machine with an estimated useful life of five years. The cost of the equipment was $40,000 with a residual value of $5,000. Prepare a complete depreciation table under the two depreciation methods listed below. Straight-line. 200 percent declining-balance. 150 percent declining-balance with a switch to straight-line when it will maximize depreciation expense.arrow_forward
- Depreciation On July 1, 2016, Dexter Corp. buys a computer system for $260,000 in cash. Assume that the computer is expected to have a four-year life and an estimated salvage value of $20,000 at the end of that time. Required Prepare the journal entry to record the purchase of the computer on July 1, 2016. Compute the depreciable cost of the computer. Using the straight-line method, compute the monthly depreciation. Prepare the adjusting entry to record depreciation at the end of July 2016. Compute the computers carrying value that will be shown on Dexters balance sheet prepared on December 31, 2016.arrow_forwardChoice Among Depreciation Methods Walnut Ridge Production Inc. purchased a new computerized video editing machine at a cost of $450,000. The System has a residual value of $64,000 and an expected life of 5 years. Required: 1. Compute depreciation expense, accumulated depreciation, and book value for the first 3 years of the machines life using the (a) straight-line method and (b) double-declining-balance method. 2. Which method would produce the largest income in the first, second, and third years of the assets life? 3. CONCEPTUAL CONNECTION Why might the controller of Walnut Ridge Production be interested in the effect of choosing a depreciation method? Evaluate the legitimacy of these interests.arrow_forwardIMPACT OF IMPROVEMENTS AND REPLACEMENTS ON THE CALCULATION OF DEPRECIATION On January 1, 20-1, Dans Demolition purchased two jackhammers for 2,500 each with a salvage value of 100 each and estimated useful lives of four years. On January 1, 20-2, a stronger blade to improve performance was installed in Jackhammer A for 800 cash and the compressor was replaced in Jackhammer B for 200 cash. The compressor is expected to extend the life of Jackhammer B one year beyond the original estimate. REQUIRED 1. Using the straight-line method, prepare general journal entries for depreciation on December 31, 20-1, for Jackhammers A and B. 2. Enter the transactions for January 20-2 in a general journal. 3. Assuming no other additions, improvements, or replacements, calculate the depreciation expense for each jackhammer for 20-2 through 20-4.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
College Accounting, Chapters 1-27 (New in Account...AccountingISBN:9781305666160Author:James A. Heintz, Robert W. ParryPublisher:Cengage Learning
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
College Accounting, Chapters 1-27 (New in Account...
Accounting
ISBN:9781305666160
Author:James A. Heintz, Robert W. Parry
Publisher:Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Accounting for Derivatives_1.mp4; Author: DVRamanaXIMB;https://www.youtube.com/watch?v=kZky1jIiCN0;License: Standard Youtube License
Depreciation|(Concept and Methods); Author: easyCBSE commerce lectures;https://www.youtube.com/watch?v=w4lScJke6CA;License: Standard YouTube License, CC-BY