461 purS Long-Term Assets: Fixed and Intangible ercises BE 9-1 Straight-line dep
ID: 2517587 • Letter: 4
Question
461 purS Long-Term Assets: Fixed and Intangible ercises BE 9-1 Straight-line depreciation A building acquired at the beginning of the year at a cost of $1,450,000 has an estimated re- sidual value of $300,000 and an estimated useful life of 10 years. Determine (A) the depreciable cost, (B) the straight-line rate, and (C) the annual straight-line depreciation. Obj. 2 Obj. 2 BE 9-2 Units-of-activity depreciation A truck acquired at a cost of $69,000 has an estimated residual value of $12,000, has an estimated useful life of 300,000 miles, and was driven 77,000 miles during the year. Determine (A) the depreciable cost, (B) the depreciation rate, and (C) the units-of-activity depreciation for the year. Obj. 2 BE 9-3 Double-declining-balance depreciation A building acquired at the beginning of the year at a cost of $1,375,000 has an estimated residual value of $250,000 and an estimated useful life of 40 years. Determine (A) the double- declining-balance rate and (B) the double-declining-balance depreciation for the first year.Explanation / Answer
Answer
A
Cost
$1450000
B
Residual value
$300000
C=A-B
Depreciable cost [Answer A]
$1150000
D
Life [in years]
10
E=C/D
Annual Depreciation [Answer C]
$115000
F=E/C
Straight Line Rate [Answer B]
10%
A
Cost
$69000
B
Residual value
$12000
C=A-B
Depreciable cost [Answer A]
$57000
D
Useful Life in Miles
300000
E=C/D
Depreciation rate per miles [Answer B]
$0.19
F
Units driven [miles]
77000
G=E x F
Units of activity depreciation for the year [Answer C]
$14630
A
Cost
$1375000
B
Depreciable cost [Answer A]
$250000
C=A-B
Depreciable cost
$1125000
D
Life [in years]
40
E=C/D
Depreciation (Annual SLM)
$28125
F=E/C
SLM Depreciation rate
2.5%
G = F x 2
Double Declining Balance Rate [Answer A]
5.0%
H= A x G
Double Declining Balance depreciation for the first years [Answer B]
$68750
A
Cost
$1450000
B
Residual value
$300000
C=A-B
Depreciable cost [Answer A]
$1150000
D
Life [in years]
10
E=C/D
Annual Depreciation [Answer C]
$115000
F=E/C
Straight Line Rate [Answer B]
10%
A
Cost
$69000
B
Residual value
$12000
C=A-B
Depreciable cost [Answer A]
$57000
D
Useful Life in Miles
300000
E=C/D
Depreciation rate per miles [Answer B]
$0.19
F
Units driven [miles]
77000
G=E x F
Units of activity depreciation for the year [Answer C]
$14630
A
Cost
$1375000
B
Depreciable cost [Answer A]
$250000
C=A-B
Depreciable cost
$1125000
D
Life [in years]
40
E=C/D
Depreciation (Annual SLM)
$28125
F=E/C
SLM Depreciation rate
2.5%
G = F x 2
Double Declining Balance Rate [Answer A]
5.0%
H= A x G
Double Declining Balance depreciation for the first years [Answer B]
$68750
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