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AC 305 Lecture Notes - Lecture 11: Impaired Asset, Book Value, Income Statement

55 views10 pages
redcamel972
18 Mar 2017
School
Quinnipiac University
Department
Accounting
Course
AC 305
Professor
Ryack

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Document Summary

Assume the following related to a piece of machinery used by the salisbury co. Using the activity based method, calculate: (a) depreciation expense assuming the machine was used for 6,400 hours in the first year of its useful life, and (b) the book value at the end of the first year. The cost of an asset charged to expense. The estimated life that an asset is useful or can remain in service for a company. The estimated value of an asset at the end of its service life. An asset is depreciated until the salvage value is reached. Asset cost less salvage value: deprecation base = cost-salvage value. A contra asset account that reduces the value of an asset on the balance sheet. The net value of an asset on the books/balance sheet. Book value = (cost = accumulated depreciation: activity method (units of production) Depreciation is assumed to be a function of productivity rather than the passage of time.

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Related Questions

2.

On March 31, 2018, Canseco Plumbing Fixtures purchased equipment for $32,000. Residual value at the end of an estimated four-year service life is expected to be $8,000. The company expects the machine to operate for 20,000 hours.


a. Calculate depreciation expense for 2018 and 2019 using straight line method.
b. Calculate depreciation expense for 2018 and 2019 using sum-of-the-years’-digits method.
c. Calculate depreciation expense for 2018 and 2019 using double-declining balance method.

A.

Calculate depreciation expense for 2018 and 2019 using straight line method.
Straight-Line Depreciation
Choose Numerator: / Choose Denominator: = Annual Depreciation
? / ? = Annual Depreciation
? / ? = ?
Year Annual Depreciation x Fraction of Year = Depreciation Expense
2018 x ? = ?
2019 x ? = ?

B. Calculate depreciation expense for 2018 and 2019 using sum-of-the-years’-digits method.

Sum-of-the-years' digits depreciation
Depreciable Base x Rate per Year x Fraction of Year = Depreciation Expense
4/1/2018 through 12/31/2018 ? x ? x ? = ?
Total depreciation expense - 2018
1/1/2019 through 3/31/2019 x ? x ? = ?
4/1/2019 through 12/31/2019 x ? x ? = ?
Total depreciation expense - 2019

C. Calculate depreciation expense for 2018 and 2019 using double-declining balance method.
Depreciation for the Period End of Period
Annual Period Beginning of Period Book Value Depreciation Rate Fraction of Year Depreciation Expense Accumulated Depreciation Book Value
2016 ? ? ? ?
2017 ? ? ? ?

On January 1, 2018, Canseco Plumbing Fixtures purchasedequipment for $64,000. Residual value at the end of an estimatedfour-year service life is expected to be $10,000. The companyexpects the machine to operate for 10,000 hours. The machineoperated for 3,900 and 4,700 hours in 2018 and 2019, respectively.Calculate depreciation expense for 2018 and 2019 using straightline method. Calculate depreciation expense for 2018 and 2019 usingsum-of-the-years'-digits method. Calculate depreciation expense for2018 and 2019 using double-declining balance method. Calculatedepreciation expense for 2018 and 2019 using units-of-productionmethod (using machine hours). (Round "Depreciation per machinehour" answers to 2 decimal places.)

On January 1, 2016, Canseco Plumbing Fixtures purchasedequipment for $44,000. Residual value at the end of an estimatedfour-year service life is expected to be $8,000. The companyexpects the machine to operate for 20,000 hours. The machineoperated for 2,900 and 3,700 hours in 2016 and 2017,respectively.

a. Calculate depreciation expense for 2016 and 2017 usingstraight line method.

b. Calculate depreciation expense for 2016 and 2017 usingsum-of-the-years'-digits method.

c. Calculate depreciation expense for 2016 and 2017 usingdouble-declining balance method.

d. Calculate depreciation expense for 2016 and 2017 usingunits-of-production method (using machine hours). (Round"Depreciation per machine hour" answers to 2 decimal places.)