On April 30, 2014, Tilton Products purchased machinery for $55,000. The useful l

Question

On April 30, 2014, Tilton Products purchased machinery for $55,000. The useful life of this machinery is estimated at 8 years, with an $15,000 residual value.

1)Assume that in its financial statements, Tilton Products uses straight-line depreciation and the half-year convention. Depreciation expense recognized on this machinery in 2014 and 2015 will be:

2)Assume that in its financial statements, Tilton Products uses the 200%-declining-balance method and the half-year convention. Depreciation expense in 2014 and 2015 will be:

3)Assume that in its financial statements, Tilton Products uses the 150%-declining-balance method and the half-year convention. Depreciation expense in 2014 and 2015 will be:

Explanation / Answer

1. Depreciation = cost of asset - residual value / estimated life of asset

= 55000 - 15000 / 8 = 5000

for half year convention is

depreciation = 5000 /2 = 2500

for april30 to oct 30 2014 depreciation expense = 2500

oct 30 2014 to apr 30 2015 depreciation expense = 2500

2. depreciation percent = 200% / 8 = 25% per year

for half year = 12.5%

for apr 30 to oct 30 2014, depreciation expense = 55000 * 12.5% = 6875

oct 30 to apr 30 2015 , depreciation expense = 55000 - 6875 = 48125

48125 * 12.5% = 6016

3. depreciation percent = 150% / 8 = 18.75% per year

for half year = 18.75% / 2 = 9.4%

for apr 30 to oct 30 2014 , depreciation expense = 55000 * 9.4% = 5170

for oct 30 to apr 30 2015, depreciation expense = 55000- 5170 = 49830

49830 * 9.4% = 4684.

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.