A. Swanson & Hiller, Inc., purchased a new machine on September 1, 2012 at a cos
ID: 2457456 • Letter: A
Question
A. Swanson & Hiller, Inc., purchased a new machine on September 1, 2012 at a cost of $160,000. The machine’s estimated useful life at the time of the purchase was five years, and its residual value was $10,000. Instructions a-1. Prepare a complete depreciation schedule, beginning with calendar year 2012, using the straight-line method. (Assume that the half-year convention is used).
B. Prepare a complete depreciation schedule, beginning with calendar year 2012, using the 200 percent declining-balance method. (Assume that the half-year convention is used). (Round your answers to the nearest dollar amount.
Prepare a complete depreciation schedule, beginning with calendar year 2012, using the 150 percent declining-balance, switching to straight-line when that maximizes the expense. (Assume that the half-year convention is used). (Round your answers to the nearest dollar amount.)
Assume that Swanson & Hiller sells the machine on December 31, 2015, for $36,000 cash. Compute the resulting gain or loss from this sale under each of the depreciation methods used in part a. (Use rounded book values for calculations. Round your final answers to the nearest whole dollar.)
Prepare a complete depreciation schedule, beginning with calendar year 2012, using the 150 percent declining-balance, switching to straight-line when that maximizes the expense. (Assume that the half-year convention is used). (Round your answers to the nearest dollar amount.)
Assume that Swanson & Hiller sells the machine on December 31, 2015, for $36,000 cash. Compute the resulting gain or loss from this sale under each of the depreciation methods used in part a. (Use rounded book values for calculations. Round your final answers to the nearest whole dollar.)
Explanation / Answer
Instructions a-1. Prepare a complete depreciation schedule, beginning with calendar year 2012, using the straight-line method
$160,000-$10,000 = $150,000/5 = $30,000
Prepare a complete depreciation schedule, beginning with calendar year 2012, using the 200 percent declining-balance method. (Assume that the half-year convention is used). (Round your answers to the nearest dollar amount.
SLM= 20%, 200% Declining = 2*20 = 40%
Prepare a complete depreciation schedule, beginning with calendar year 2012, using the 150 percent declining-balance, switching to straight-line when that maximizes the expense. (Assume that the half-year convention is used).
SLM= 20%, 150% Declining = 1.5*20 = 30%
*Switch to Straight Line Method
Assume that Swanson & Hiller sells the machine on December 31, 2015, for $36,000 cash. Compute the resulting gain or loss from this sale under each of the depreciation methods used in part a
1. Straight Line Method
Dr Cash 36,000
Book Value as 12/31/15 55,000
Loss on Disposal ($19,000)
2. 200% Declining Balance
Cash proceeds = $36,000
Book Value as 12/31/15 = $-27,648
profit on disposal = $8,352
3. 150% Declining Balance
Cash proceeds = $36,000
Book value as of 12/31/15 = -$31,648
Profit on disposal = $4,352
Year Depreciation Acc. Depreciation Book Value 2012 $15,000 $15,000 $145,000 2013 $30,000 $45,000 $115,000 2014 $30,000 $75,000 $85,000 2015 $30,000 $105,000 $55,000 2016 $30,000 $145,000 $25,000Related Questions
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