Items arriving and departing a work center Items arriving and departing a work c
ID: 2511405 • Letter: I
Question
Items arriving and departing a work center Items arriving and departing a work center Xtu12345) 1. Accumulated Depreciation at the end of the second 2. Depreciation Expense year two (Double Declining Balance) 3. Book Value of the Equipment at the end of the second year (Activity Based) year (Straight Line B&A; Company purchased store equipment for $34,000. B&A; Company estimates that at the end of its 10-year service life, the equipment will be worth S5,000. During the 10-year period, the company expects to use the equipment for a total of 10,000 hours. B&A; Company used the equipment for 1,650 hours the first year and 1,700 hours in the second year 1. What is the Accumulated Depreciation at the end of year two under Straight-line Method? 2. What is the Depreciation Expense for year one under Double Declining Balance? 3. What is the Book Value of the equipment at the end of year two under Activity Based? 210 P Chapter 3 Cume. Additional CMO 7Explanation / Answer
Answer
A
Equipment cost
$34000
B
Salvage value
$5000
C=A-B
Depreciable base
$29000
D
Life [10 years]
10
E=C/D
SLM annual depreciation
$2900
Accumulated Depreciation at the end of year 2 under SLM method will be $2900 + $2900 = $5,800
A
Equipment cost
$34000
B
Salvage value
$5000
C=A-B
Depreciable base
$29000
D
Life [10 years]
10
E=C/D
SLM annual depreciation
$2900
F=E/C
SLM Rate
10%
G=F x 2
DDB rate
20%
Depreciation expense for Year 1 under Double declining balance = $34000 x 20% = $6,800
A
Depreciable base
$29000
B
Total expected hours
10000
C=A/B
Depreciation per hour
$2.9
D=1650 x C
Depreciation for Year 1 [1650 x $2.9]
$4785
E=1700 x C
Depreciation for Year 2 [1700 x $2.9]
$4930
F=D+E
Total Accumulated depreciation till year 2
$9715
G=34000 - F
Book value at the end of year 2
$24,285
A
Equipment cost
$34000
B
Salvage value
$5000
C=A-B
Depreciable base
$29000
D
Life [10 years]
10
E=C/D
SLM annual depreciation
$2900
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