Use the information for 46 to 48. On January 1,2014, Garden Company purchased a
ID: 2542462 • Letter: U
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Use the information for 46 to 48. On January 1,2014, Garden Company purchased a new machialue was est $100,000. Depreciation was computed on the 46. What is the depreciation expense for 20 machine has an estimated useful life of nine years and the salvagesd. sum-of-the-years-digits method a. $560,000 4? b. $540,000 c. $550,000 d. $570,000 47. What is the depreciation expense for 20152 a. $540,000 b. $480,000 c. $490,000 d. $470,000 48. How much accumulated depreciation Garden Company should report on its 2015 balande sheet? a. $540,000 b. $480,000 c. $1,020,000 d. $470,000 49. Ramos Co. purchased machinery that was installed and ready for use on January 3, 2014, at a total cost of $115,000. Salvage value was estimated at $15,000. The machinery will be depreciated over five years using the double-declining balance method. For the year 2015, Ramos should record depreciation expense on this machinery of a. $24,000. b. $27.600 c. $30.000. d. $46,000. 50. In March, 2014, Mallory Mines Co. purchased a coal mine for $8,000,000. Removable coal is estimated at 1,500,000 tons. Mallory is required to restore the land at an estimated cost of $960,000, and the land should have a value of $840,000. The company incurred $2,000,000 of development costs preparing the mine for production. During 2014, 450,000 tons were removed and 300,000 tons were sold. The total amount of depletion that Mallory should record for 2014 is as 1,832,000 b. $2,024,000. c. $2,748,000 d. $3.036,000.Explanation / Answer
Year
Depreciation
Base
Remaining life
Depreciation
fraction
Depreciation
Expenses
Accumulated Dpreciation
2014
$ 27,00,000
9
9/45
5,40,000
5,40,000
2015
$ 27,00,000
8
8/45
4,80,000
10,20,000
2016
$ 27,00,000
7
7/45
4,20,000
14,40,000
2017
$ 27,00,000
6
6/45
3,60,000
18,00,000
2018
$ 27,00,000
5
5/45
3,00,000
21,00,000
2019
$ 27,00,000
4
4/45
2,40,000
23,40,000
2020
$ 27,00,000
3
3/45
1,80,000
25,20,000
2021
$ 27,00,000
2
2/45
1,20,000
26,40,000
2022
$ 27,00,000
1
1/45
60,000
27,00,000
45
Depreciation Base = Cost – Salvage Value
= $28,00,000 - $ 1,00,000
= $ 27,00,000
Answers 46 - Depreciation Expense for 2014 = $ 5,40,000
Answers 47 - Depreciation Expense for 2015 = $ 4,80,000
Answers 48 - Accumulated Depreciation to be reported in 2015 Balance Sheet = $ 10,20,000
Year
Book Value Begining
Double Declining Depreciation = 2 x SL Depreciation Rate x Book Value Begining
Net Book Value End
2014
$ 115000
$ 46000
$ 69000
2015
$ 69000
$ 27600
$ 41400
2016
$ 41400
$ 16560
$ 24840
2017
$ 24840
$ 9936
$ 14904
Stright Line Rate = 1/5=20%
Answers 49 - Depreciation Exprenses for the year 2015 under Double Declining Balance Method = $ 27,600
Year
Depreciation
Base
Remaining life
Depreciation
fraction
Depreciation
Expenses
Accumulated Dpreciation
2014
$ 27,00,000
9
9/45
5,40,000
5,40,000
2015
$ 27,00,000
8
8/45
4,80,000
10,20,000
2016
$ 27,00,000
7
7/45
4,20,000
14,40,000
2017
$ 27,00,000
6
6/45
3,60,000
18,00,000
2018
$ 27,00,000
5
5/45
3,00,000
21,00,000
2019
$ 27,00,000
4
4/45
2,40,000
23,40,000
2020
$ 27,00,000
3
3/45
1,80,000
25,20,000
2021
$ 27,00,000
2
2/45
1,20,000
26,40,000
2022
$ 27,00,000
1
1/45
60,000
27,00,000
45
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