On January 1, 2016, Hobart Mfg. Co. purchased a drill press at a cost of $27,200
ID: 2476532 • Letter: O
Question
On January 1, 2016, Hobart Mfg. Co. purchased a drill press at a cost of $27,200. The drill press is expected to last 10 years and has a residual value of $5,200. During its 10-year life, the equipment is expected to produce 500,000 units of product. In 2016 and 2017, 21,000 and 76,000 units, respectively, were produced.
Compute depreciation for 2016 and 2017 and the book value of the drill press at December 31, 2016 and 2017, assuming the straight-line method is used.
Compute depreciation for 2016 and 2017 and the book value of the drill press at December 31, 2016 and 2017, assuming the double-declining-balance method is used.
Compute depreciation for 2016 and 2017 and the book value of the drill press at December 31, 2016 and 2017, assuming the sum-of-the-years'-digits method is used. (Round your intermediate calculations to the nearest whole dollar amount.)
Compute depreciation for 2016 and 2017 and the book value of the drill press at December 31, 2016 and 2017, assuming the units-of-production method is used. (Round depreciation per unit to 2 decimal places.)
Required 1:Compute depreciation for 2016 and 2017 and the book value of the drill press at December 31, 2016 and 2017, assuming the straight-line method is used.
Required 2:Compute depreciation for 2016 and 2017 and the book value of the drill press at December 31, 2016 and 2017, assuming the double-declining-balance method is used.
Required 3:Compute depreciation for 2016 and 2017 and the book value of the drill press at December 31, 2016 and 2017, assuming the sum-of-the-years'-digits method is used. (Round your intermediate calculations to the nearest whole dollar amount.)
Required 4:Compute depreciation for 2016 and 2017 and the book value of the drill press at December 31, 2016 and 2017, assuming the units-of-production method is used. (Round depreciation per unit to 2 decimal places.)
Explanation / Answer
Req 1 SLM Cost of Drill press 27,200.00 Salvage Value 5,200.00 Life in years 10.00 Particulars 2016 2017 Opening Balance 27,200.00 25,000.00 Depreciation( 27,200 -5,200)/10 2,200.00 2,200.00 Book Value at end 25,000.00 22,800.00 Req2 Life 10 Years Double decling balance method rate = 10%*2 20% Particulars 2016 2017 Opening Balance 27,200.00 21,760.00 Depreciation@20% 5,440.00 4,352.00 Book Value at end 21,760.00 17,408.00 Req3 Sum of years digits Method Life in years 10.00 Cost of Asset 27,200.00 Salavge Value 5,200.00 Depreciable Value = 22,000.00 sum of the years' digits depreciation calculation is = n(n+1)/2 = 10(10+1)/2 = 10*11/2 = 110/2 = 55 Year Depreciation WN Book Value at end 2016 4,000.00 22,000/55 * 10 23,200.00 2017 3,600.00 22,000/55 * 9 19,600.00 7,600.00 Reqd4 Units of production Cost of Machine 27,200.00 Salvage Value 5,200.00 Life in Units 500,000.00 Particulars 2016 2017 Opening Balance 27,200.00 26,276.00 Units of production 21,000.00 76,000.00 Depreciation(Units/500,000)*22000 924.00 3,344.00 Book Value at end 26,276.00 22,932.00
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