Lone Star Sales & Service acquired a new machine that cose $42,000 in early 2006
ID: 2421896 • Letter: L
Question
Lone Star Sales & Service acquired a new machine that cose $42,000 in early 2006. The machine is expected to have a five-year useful life and is estimated to have a salvage value of $7000 at the end of its life. (Round your final answers to the nearest dollar).
For part (c), the machine is expected to produce 100,000 units during the five year useful life.
Year 1 - 20,000 units produced
Year 2 - 15,000 units produced
Year 3 - 35,000 units produced
Year 4 - 25,000 units produced
Year 5 - 5,000 units produced
Calculate the depreciation for the above equipment using the three methods below:
(a) Straight Line Method
(b) Double Declining Balance Method
(c) Units of Production Method
A YR Netbook value 1/1 depreciation expense accumulated depreciation net book value 12/31 1 2 3 4 5 B year net book value 1/1 depreciation expense accumulated depreciation net book value 12/31 1 2 3 4 5 c Year net book value 1/1 depreciation expense accumalted depreciation net book value 12/31 1 2 3 4 5Explanation / Answer
New machine that cost = $42,000
salvage value of== $7000
use ful life = 5years
1. Depreciation as per SLM = asset cost - salvage value / life
=( $42000 - $7000)/5 = $7000
2. double declining depreciation = 2*(asset cost- salvage value)/life
= 2*(42000-7000)/5 = 14000
3.Depreciation as per unit of production method = units produced/total units * (asset cost- salvage value)
1st year = 20000/100000 * (42000-7000)
= 7000 units
A
YR
Netbook value 1/1
depreciation expense
accumulated depreciation
net book value 12/31
1
42000
7000
7000
35000
2
35000
7000
14000
28000
3
28000
7000
21000
21000
4
21000
7000
28000
14000
5
14000
7000
35000
7000
B
YR
Netbook value 1/1
depreciation expense
accumulated depreciation
net book value 12/31
1
42000
14000
14000
28000
2
28000
14000
28000
14000
3
14000
7000
35000
7000
4
5
C
YR
Netbook value 1/1
depreciation expense
accumulated depreciation
net book value 12/31
1
42000
7000
7000
35000
2
35000
5250
12250
29750
3
29750
12250
24500
17500
4
17500
8750
33250
8750
5
8750
1750
35000
7000
A
YR
Netbook value 1/1
depreciation expense
accumulated depreciation
net book value 12/31
1
42000
7000
7000
35000
2
35000
7000
14000
28000
3
28000
7000
21000
21000
4
21000
7000
28000
14000
5
14000
7000
35000
7000
B
YR
Netbook value 1/1
depreciation expense
accumulated depreciation
net book value 12/31
1
42000
14000
14000
28000
2
28000
14000
28000
14000
3
14000
7000
35000
7000
4
5
C
YR
Netbook value 1/1
depreciation expense
accumulated depreciation
net book value 12/31
1
42000
7000
7000
35000
2
35000
5250
12250
29750
3
29750
12250
24500
17500
4
17500
8750
33250
8750
5
8750
1750
35000
7000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.