The following information applies to the questions displayed below) Nicole\'s Ge
ID: 2510903 • Letter: T
Question
The following information applies to the questions displayed below) Nicole's Getaway Spa (NGS) purchased a hydrotherapy tub system to add to the wellness programs at NGS. The machine was purchased at the beginning of the year at a cost of $24,500. The estimated useful Ife was five years and the residual value was $1,500. Assume that the estimated productive life of the machine is 10,000 hours. Expected annual production was year 1, 2.500 hours: year 2, 2.400 hours; year 3, 2,000 hours; year 4, 2100 hours; and year 5, 1000 hours value: 0.90 points 1. Complete a depreciation schedule for each of the alternative methods. (Do not rouhu intermed calculations. Round your final answers to the nearest dollar amount.) Depreciation Accumulated Book Value Year At Acquisition Year 1 Year 2 Year 3 Year 4 Year 5 b. Units-of-production. DepreciationBook Value Year 1 Year 2 Year 3 YearAExplanation / Answer
straight line method of depreciation
cost of machine
24500
scrap value
1500
Depreciation base
23000
life of machine in years
5
annual depreciation
23000/5
4600
Year
Depreciation expense
accumulated depreciation
book value
at acquisition
0
0
24500
1
4600
4600
24500
2
4600
9200
24500
3
4600
13800
24500
4
4600
18400
24500
5
4600
23000
24500
Unit of production method of depreciation
cost of machine
24500
scrap value
1500
Depreciation base
23000
estimated productive life
10000
depreciation expense per hour
23000/10000
2.3
Depreciation
Year
Yearly hours worked
depreciation rate per hour
1
2500
2.3
5750
2
2400
2.3
5520
3
2000
2.3
4600
4
2100
2.3
4830
5
1000
2.3
2300
Year
Depreciation expense
accumulated depreciation
book value
at acquisition
0
0
24500
1
5750
5750
24500
2
5520
11270
24500
3
4600
15870
24500
4
4830
20700
24500
5
2300
23000
24500
double declining method of depreciation
cost of machine
24500
scrap value
1500
Depreciation base
23000
straight line rate
1/5
20%
double declining rate
20*2
40%
Depreciation
Year
book value
depreciation rate
annual depreciation = rate *book value
year end balance
1
24500
40%
9800
14700
2
14700
40%
5880
8820
3
8820
40%
3528
5292
4
5292
40%
2116.8
3175.2
5
3175.2
40%
1270.08
1905.12
Year
Depreciation expense
accumulated depreciation
book value
at acquisition
0
0
24500
1
9800
9800
24500
2
5880
15680
24500
3
3528
19208
24500
4
2116.8
21324.8
24500
5
1270.08
22594.88
24500
date
explanation
debit
credit
31-Dec
cash
7350
accumulated depreciation
13800
loss on sale of hydrotherapy sub system
3350
hydrotherapy sub system
24500
31-Dec
cash
7350
accumulated depreciation
15870
loss on sale of hydrotherapy sub system
1280
hydrotherapy sub system
24500
31-Dec
cash
7350
accumulated depreciation
19208
gain on sale of hydrotherapy subsystem
2058
hydrotherapy sub system
24500
staright line method
Unit of production method
double declining method
sales
61000
61000
61000
cost of goods sold
-48000
-48000
-48000
gross profit
13000
13000
13000
less operating expenses
-4100
-4100
-4100
depreciation expense
-4600
-4600
-3528
operating profit
4300
4300
5372
gain or loss on sale of subsystem
-3350
-1280
2058
less interest expense
-600
-600
-600
profit before tax
350
2420
6830
straight line method of depreciation
cost of machine
24500
scrap value
1500
Depreciation base
23000
life of machine in years
5
annual depreciation
23000/5
4600
Year
Depreciation expense
accumulated depreciation
book value
at acquisition
0
0
24500
1
4600
4600
24500
2
4600
9200
24500
3
4600
13800
24500
4
4600
18400
24500
5
4600
23000
24500
Unit of production method of depreciation
cost of machine
24500
scrap value
1500
Depreciation base
23000
estimated productive life
10000
depreciation expense per hour
23000/10000
2.3
Depreciation
Year
Yearly hours worked
depreciation rate per hour
1
2500
2.3
5750
2
2400
2.3
5520
3
2000
2.3
4600
4
2100
2.3
4830
5
1000
2.3
2300
Year
Depreciation expense
accumulated depreciation
book value
at acquisition
0
0
24500
1
5750
5750
24500
2
5520
11270
24500
3
4600
15870
24500
4
4830
20700
24500
5
2300
23000
24500
double declining method of depreciation
cost of machine
24500
scrap value
1500
Depreciation base
23000
straight line rate
1/5
20%
double declining rate
20*2
40%
Depreciation
Year
book value
depreciation rate
annual depreciation = rate *book value
year end balance
1
24500
40%
9800
14700
2
14700
40%
5880
8820
3
8820
40%
3528
5292
4
5292
40%
2116.8
3175.2
5
3175.2
40%
1270.08
1905.12
Year
Depreciation expense
accumulated depreciation
book value
at acquisition
0
0
24500
1
9800
9800
24500
2
5880
15680
24500
3
3528
19208
24500
4
2116.8
21324.8
24500
5
1270.08
22594.88
24500
date
explanation
debit
credit
31-Dec
cash
7350
accumulated depreciation
13800
loss on sale of hydrotherapy sub system
3350
hydrotherapy sub system
24500
31-Dec
cash
7350
accumulated depreciation
15870
loss on sale of hydrotherapy sub system
1280
hydrotherapy sub system
24500
31-Dec
cash
7350
accumulated depreciation
19208
gain on sale of hydrotherapy subsystem
2058
hydrotherapy sub system
24500
staright line method
Unit of production method
double declining method
sales
61000
61000
61000
cost of goods sold
-48000
-48000
-48000
gross profit
13000
13000
13000
less operating expenses
-4100
-4100
-4100
depreciation expense
-4600
-4600
-3528
operating profit
4300
4300
5372
gain or loss on sale of subsystem
-3350
-1280
2058
less interest expense
-600
-600
-600
profit before tax
350
2420
6830
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