A.1 Michigan Manufacturing uses the straight-line method of depreciation. A larg
ID: 2612775 • Letter: A
Question
A.1
Michigan Manufacturing uses the straight-line method of depreciation. A large fork-lift was purchased for $62,500. It has an estimated life of five years and an estimated scrap value of $2,500.
Compute the book value at the end of the first year.
$___________
A.2
Apex Electronics uses the straight-line method of depreciation. Electronic equipment costing $112,500 has an estimated life of ten years and an estimated scrap value of $7,250.
Compute the book value at the end of the third year.
$___________
A.3
Perry Processing, Inc. uses the units-of-production method of depreciation. A packaging machine costing $108,500 has 40,000 estimated hours of operation and an estimated scrap value of $12,500. It operated 4,200 hours in the first year.
Compute the book value at the end of the first year.
$___________
A.4
Cole Camping Company, Inc. uses the double-declining-balance method of depreciation. A piece of equipment costing $37,500 has an estimated life of five years and an estimated scrap value of $2,700.
Compute the book value at the end of the second year.
$_________
A.5
A retail store using sum-of-the-years-digits method of depreciation purchased equipment costing $36,000 and put it into use June 1. The equipment is expected to have a useful life of 10 years and an estimated resale value of $2,400.
Compute the book value at the end of the second year. Round depreciation amounts to the nearest dollar.
$____________
A.6
A publisher using the sum-of-the-years-digits method of depreciation purchased office furniture costing $36,000 and put it into use May 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $2,400.
Compute the book value at the end of the second year. Round depreciation amounts to the nearest dollar.
$_____________
Explanation / Answer
A1: Ans
Depreciation per year = (62500-2500)/5 = 12000
Book value at the end of the year = 62500 - 12000 = 50500
A2: Ans
Depreciation per year = 112500 - 72500 / 10 = 10525
Depreciation for 3 years = 31575
book value at the end of 3 years = 80925
A3: Ans
Depreciation for the year = (108500 - 12500)*4200/40000 =10080
book value at the end of the year = 98420
A4: Ans
Depreciation at the rate of 40%
book value at the end of two years = 13500
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