I need calculations too! THANK YOU SO MUCH!!!!!! Be wrap Text Copy ? ??||? ?| |+

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I need calculations too! THANK YOU SO MUCH!!!!!!

Be wrap Text Copy ? ??||? ?| |++] Merge & Center. | $ ? % ..0l+oo Conditional Format Cell Formatting as Table Styles Paste , Format B I UE B15 : 1 v/ fx i Create formulas with absolute and relative cell references. 1 Chapter 9 2 Using Excel P9-42 Using Excel to prepare depreciation schedules The Fraser River Corporation has purchased a new piece of factory equipment on January 1, 2018, and wishes to compare three depreciation methods: straight-line, double-declining-balance, and 7 The equipment costs $400,000 and has an estimated useful life of four years, or 8,000 machine hours. At the end of four years, the equipment is estimated to have a residual value of $20,000 9 Requirements 1. Use Excel to prepare depreciation schedules for straight-line, double-declining-balance, and units-of-production methods. 2. Prepare a second depreciation schedule for double-declining -balance method, using the Excel function DD8. The DD8 function cannot be used in the last year of the asset's useful life At December 31, 2018, Fraser River is trying to determine if it should sell the factory equipment. Fraser River will only sell the factory equipment if the company earns a gain of at least $6,000. For each of the depreciation methods, what is the minimum amount that Fraser River will sell the factory equipment for in order to have a gain of $6,000? 12 Excel Skills 15 1. Create forr ulas with absolute and relative cell references 2. Format the cells as accounting number format. 3. Use the Excel function DD8 to calculate double-declining balance depreciation. 17 19 21 23 Instructions Depreciation Methods + Ready

Explanation / Answer

1) Straight Line Method

Depreciable Cost = Cost - residual value = $400,000-$20,000 = $380,000

Depreciation rate = 1/4 yrs = 0.25 or 25%

Table Showing Depreciation under straight Line (Amounts in $)

Under this method, the book value at the end of Dec 31, 2018 (i.e. at the end of year 1) will be equal to $305,000. Therefore to earn a gain of $6,000 on sale of equipment, the company should sell the equipment for minimum amount of $311,000 (i.e. $305,000+$6,000).

Double Declining Balance Method

Depreciation rate = (1/4 yrs)*2 = 0.50 or 50%

Table showing depreciation under DDB method (Amounts in $)

Under this method, the book value at the end of Dec 31, 2018 (i.e. at the end of year 1) will be equal to $200,000. Therefore to earn a gain of $6,000 on sale of equipment, the company should sell the equipment for minimum amount of $206,000 (i.e. $200,000+$6,000).

Units of Production Method

Depreciation per unit = (Cost - Residual Value)/Useful Life (Hours)

= ($400,000 - $20,000)/8,000 hours = $47.50 per hour

Table showing depreciation under units of production method (Amounts in $)

Under this method, the book value at the end of Dec 31, 2018 (i.e. at the end of year 1) will be equal to $286,000. Therefore to earn a gain of $6,000 on sale of equipment, the company should sell the equipment for minimum amount of $292,000 (i.e. $286,000+$6,000).

Year Depreciable Cost (A) Rate (B) Depreciation Expense (C = A*B) Accumulated Depreciation (D) Book Value (Cost of $400,000- D) 1 380,000 25% 95,000 95,000 305,000 2 380,000 25% 95,000 190,000 210,000 3 380,000 25% 95,000 285,000 115,000 4 380,000 25% 95,000 380,000 20,000

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