Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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Chapter 8, Problem 9SE
To determine
Compute Company T’s depreciation expense on the truck using the straight-line depreciation method, for the year 1.
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(Learning Objectives 3, 4: Measure DDB depreciation; analyze the effect of a saleof a plant asset) On January 2, 2018, Drake Furnishings purchased display shelving for $8,100cash, expecting the shelving to remain in service for five years. Drake depreciated the shelvingon a double-declining-balance basis, with $1,300 estimated residual value. On September 30,2019, the company sold the shelving for $2,400 cash. Record both the depreciation expense onthe shelving for 2019 and its sale in September. Also show how to compute the gain or loss onthe disposal of the shelving
(Learning Objective 3: Compute depreciation and book value by three methods—firstyear only) On January 1, 2017, Northeast Transportation Company purchased a used aircraftat a cost of $58,900,000. Northeast expects the plane to remain useful for five years(7,200,000 miles) and to have a residual value of $4,900,000. Northeast expects to fly the plane750,000 miles the first year, 1,375,000 miles each year during the second, third, and fourthyears, and 2,325,000 miles the last year.1. Compute Northeast’s depreciation for the first two years on the plane using the followingmethods:a. Straight-line methodb. Units-of-production method (round depreciation per mile to the closest cent)c. Double-declining-balance method2. Show the airplane’s book value at the end of the first year under each depreciation method.
(Learning Objective 3: Determine depreciation amounts by three methods) PresleyPizza bought a used Ford delivery van on January 2, 2018, for $22,000. The van was expected toremain in service for four years (80,000 miles). At the end of its useful life, Presley managementestimated that the van’s residual value would be $2,000. The van traveled 32,000 miles the firstyear, 28,000 miles the second year, 15,000 miles the third year, and 5,000 miles in the fourth year.Requirements1. Prepare a schedule of depreciation expense per year for the van under the threedepreciation methods discussed in this chapter. (For units-of-production and doubledeclining-balance methods, round to the nearest two decimal places after each step of thecalculation.)2. Which method best tracks the wear and tear on the van?3. Which method would Presley prefer to use for income tax purposes? Explain yourreasoning in detail.
Chapter 8 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - What is depreciation, and why is it used in...Ch. 8 - Prob. 5DQCh. 8 - Which depreciation method would be moot...Ch. 8 - Prob. 7DQCh. 8 - Prob. 8DQCh. 8 - Prob. 9DQCh. 8 - Prob. 10DQ
Ch. 8 - Prob. 1SCCh. 8 - Prob. 2SCCh. 8 - How should a capital expenditure for a long-term...Ch. 8 - Which depreciation method usually produces the...Ch. 8 - Prob. 5SCCh. 8 - Prob. 6SCCh. 8 - Prob. 7SCCh. 8 - Prob. 8SCCh. 8 - Prob. 9SCCh. 8 - Prob. 10SCCh. 8 - Prob. 11SCCh. 8 - Prob. 12SCCh. 8 - Prob. 1SECh. 8 - Long-term asset terms (Learning Objective 1) 5-10...Ch. 8 - Prob. 3SECh. 8 - Lump-sum purchase (Learning Objective 2) 5-10 min....Ch. 8 - Errors in accounting for long-term assets...Ch. 8 - Concept of depreciation (Learning Objective 3)...Ch. 8 - Depreciation methods (Learning Objective 3) 10-15...Ch. 8 - Depreciation methods (Learning Objective 3) 10-15...Ch. 8 - Prob. 9SECh. 8 - Prob. 10SECh. 8 - Prob. 11SECh. 8 - Prob. 12SECh. 8 - Prob. 13SECh. 8 - Prob. 14SECh. 8 - Prob. 15SECh. 8 - Other long term assets (Learning Objective 8) 5-10...Ch. 8 - Prob. 17SECh. 8 - Prob. 18AECh. 8 - Prob. 19AECh. 8 - Prob. 20AECh. 8 - Prob. 21AECh. 8 - Depreciation methods (Learning Objective 3) 15-20...Ch. 8 - Prob. 23AECh. 8 - Prob. 24AECh. 8 - Prob. 25AECh. 8 - Prob. 26AECh. 8 - Prob. 27AECh. 8 - Prob. 28AECh. 8 - Prob. 29AECh. 8 - Prob. 30AECh. 8 - Prob. 31AECh. 8 - Prob. 32BECh. 8 - Prob. 33BECh. 8 - Prob. 34BECh. 8 - Prob. 35BECh. 8 - Prob. 36BECh. 8 - Prob. 37BECh. 8 - Prob. 38BECh. 8 - Prob. 39BECh. 8 - Prob. 40BECh. 8 - Prob. 41BECh. 8 - Prob. 42BECh. 8 - Prob. 43BECh. 8 - Prob. 44BECh. 8 - Prob. 45BECh. 8 - Long-term asset costs and partial-year...Ch. 8 - Journalizing long-term asset transactions...Ch. 8 - Prob. 48APCh. 8 - Prob. 49APCh. 8 - Prob. 50APCh. 8 - Prob. 51APCh. 8 - Prob. 52APCh. 8 - Prob. 53BPCh. 8 - Journalizing long-term asset transactions...Ch. 8 - Prob. 55BPCh. 8 - Prob. 56BPCh. 8 - Prob. 57BPCh. 8 - Prob. 58BPCh. 8 - Prob. 59BPCh. 8 - Prob. 1CECh. 8 - Prob. 1CPCh. 8 - Continuing Financial Statement Analysis Problem...Ch. 8 - Prob. 1EIACh. 8 - Prob. 2EIACh. 8 - Financial Analysis Purpose: To help familiarize...Ch. 8 - Prob. 1IACh. 8 - Prob. 1SBACh. 8 - Written Communication A client of yours notified...
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