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# Depreciation

### Maximum Depreciation Expense

Lax, LLC purchased only one asset during the current year. It placed in service computer equipment (5-year property) on August 26 with a basis of \$20,000. Calculate the maximum depreciation expense for the current year (ignoring section 179 and bonus expensing).

### Five year MACRS depreciation schedule

Calculate the MACRS 5-year Depreciation schedule with the following information: Year 1 2 3 4 5 6 Depr. Rate 20% 32% 19% 12% 11% 6% Depr. Exp. The net cost of equipment \$250,000 with annual payments of \$7

### Canseco Plumbing Fixtures: Depreciation methods: All four Years: straight line, double declining method, units of productions (machine hours)

On January 1, 2011, Canseco Plumbing Fixtures purchased equipment for \$30,000. Residual value at the end of an estimated four-year service life is expected to be \$2,000. The company expects the machine to operate for 10,000 hours. Calculate depreciation expense for all fours years of the useful life using each of the following d

### Computing Depreciation Expense for a Machine

Machine Cost = \$203,475; Estimated residual value = \$25,000; Estimated useful life = 5 years. Compute annual straight-line depreciation expense and prepare a table that shows the depriciation exprense for each year using the double-declining-balance method.

### Most frequently used method of depreciation

What is the most frequently used method of depreciation? Explain the impact, if any, on depreciation when estimates that determine depreciation change. Give examples.

### Does the difficulty in determining the current value of an asset create a problem in determining the depreciation expense that should be charged for a year? What is the difference in the way that bonds are reported by for-profit and not-for-profit organizations?

Does the difficulty in determining the current value of an asset create a problem in determining the depreciation expense that should be charged for a year? What is the difference in the way that bonds are reported by for-profit and not-for-profit organizations?

### Depreciation methods for Delta Airlines

The following information is from the June 30, 1998, balance sheet for Delta Air Lines. (Amounts are in millions) 1998 1997 Flight equipment \$11,180 \$9,619 Less: Accumulated depreciation 3,895 3,510 Note: Depreciation and Amortization - Effective July 1, 1998, the Company i

### Taxation: Key employee insurance, depreciation recovery period and expense, corporate vs US treasury bonds, gain on residence sale

Which of the following is an explanation for why insurance premiums on a key employee are not deductible? A. The insurance deduction would offset taxable income without the potential for the proceeds generating taxable income. B. The federal government does not want to subsidize insurance companies. C. Congress presumes that

### Depreciation Expense and the Gain or Loss from the Sale

A company acquired a truck for \$79,000 at the beginning of the fiscal year. It has a useful life of 5 years and a residual value of \$9,000. The company uses the straight-line method of depreciation. After owning the truck for two years, the company sold it for \$34,000. (a) Determine depreciation expense for each of the first two

### straight-line method of depreciation and financial statements

A machine with a useful life of 6 years and a residual value of \$3,000 was purchased at the beginning of year 1 for \$30,000. The machine was sold for \$15,000 on April 1 in year 4. (a) What was the book value of the equipment at the end of year 3 assuming the straight-line method of depreciation is used? (b) Illustrate the

### Taxation: Sec 1231 netting process, accumulated depreciation on disposal

Winchester LLC sold the following business assets during the current year: (1) automobile, \$30,000 cost basis, \$12,000 depreciation, proceeds \$20,000; (2) machinery, \$25,000 cost basis, \$20,000 depreciation, proceeds \$10,000; (3) furniture, \$15,000 cost basis, \$10,000 depreciation, proceeds \$4,000; (4) computer equipment, \$2

### Rijo Corp: Journalize Transactions and Depreciation Disposals

At December 31, 2010, Rijo Corporation reported the following plant assets. Land \$3,657,000 Buildings \$32,303,500 Less: Accumulated depreciation - buildings 14,749,900 17,553,600 Equipment 48,760,000 Less: Accumulated depreciation - equipment \$42,665,000 Total plant assets = \$63,875,600 During 2011, the follo

### Precision Manufacturing: Computing Depreciation

At the beginning of 2012, Precision Manufacturing purchased a new computerized drill press for \$50,000, it is expected to have a five-year life and a \$5000.00 salvage value. Required: a. Compute the depreciation for each of the five years, assuming that the company uses (1) Straight Line depreciation (2) Double decline b

### Accounts Receivables, Depreciation, Increasing Capital

Discuss how much money should be maintained in accounts receivables and discuss why. Define depreciation and discuss what depreciation means to the manager. Discuss the options of increasing the capital of a business.

### E11-4 Depreciation; E11-1 Change in Estimate; E12-6 Intangibles; E12-16 R&D; P12-3

Please see attached Excel file for proper format. E11-4 Purchased Machinery on May 1, 2007 325,000 Useful life 10 Years Salvage Value 15,000 Production of 240,000 Units Working hours 25,000 During 2008 they used the machinery for 2,650 Hours and produced 25,500 Units Compute depreciation cha

### Designright Construction: Amount of Depreciation Expense

On April 1, 20X0, Designright Construction paid \$10,000 for equipment with an estimated useful life of 10 years and a residual value of \$2,000. The company uses the double-declining balance method of depreciation and applies the half-year convention to fractional periods. In 20X1, the amount of depreciation expense to be recogni

### OGJ schedule using corridor approach; THQ depreciation

Problem 1: The MUX Company provides a defined benefit pension plan for its employees. Data related to the plan follows. Balances as of December 31, 2015: Pension liability \$42,000 Plan assets 1,663,200 Projected benefit obligation 1,705,000 Unrecognized prior service cost -0- Activity during 2016:

### Brenda's basis for depreciation; which is not a Section 197 intangible asset

Brenda purchased a business for \$120,000 and received a building FMV \$80,000 land, FMV \$10,000, and furniture and fixtures, FMV \$130,000. She spent \$10,000 on legal fees to make the purchase. What is the basis of these item for depreciation? A. \$82,500 building, \$12,500 land, \$35,000 furniture and fixtures B. \$88,750 buildin

### Allocation of purchase price; depreciation recapture on sale

Jessica purchased a business from Laura. The sale included permit, goodwill, a building, fixtures in the building, and account receivable. In what order are the assets assigned values to determine Jessica's basis in each asset A. Goodwill, then permits, then account receivable, then building and fixtures B. Accounts receivab

### Ivy Industrial Packing Co: Depreciation Problem

Ivy Industrial Packing Co purchased a packing machine for \$950,000 at the beginning of 2009. The robot has an estimated useful life of four years and an estimated residual value of \$70,000. The packing machine, which should last 20,000 hours, was operated 6,000 in 2009; 8,000 hours in 2010; 4,000 hours in 2011; and 2,000 hours

### Depreciation for Excel Delivery and Allegheny Corporation

E 11-1. On January 1, 2011, the Excel Delivery Company purchased a delivery van for \$33,000. At the end of its five-year service life, it is estimated that the van will be worth \$3,000. During the five-year period, the company expects to drive the van 100,000 miles. Required Calculate annual depreciation for the van usi

### Straight Line Depreciation

E 11-21 in 2011, internal auditors discovered that PKE Displays Inc. has debited an expense account for \$350,000cost of a machine purchased on January 1, 2008. The machine's life was expected to be five years with no residual value. Straight line depreciation is used by PKE. Required 1. Prepare the appropriate correcting ent

### Amount of Depreciation

Equipment with a cost of \$192,000 has an estimated salvage value of \$18,000 and is estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight line method. What is the amount of depreciation for the full year, during which the equipment was used 3,300 hours? _____________________

### Bookkeeping: Recaptured Depreciation

A cement mixer was purchased tow years ago for \$120,000 and can be sold for \$125,000 today. The mixer has been depreciated using the MACRS 5 year recovery period and the firm pays 40% taxes on both ordinary and capital gain. a) compute recaptured depreciation and capital gain (loss), if any. b) Find the firm's tax liability

### Alladin Company Depreciation for Partial Period (SL, SYD and DDB)

Alladin Company purchased Machine #201 on May 1, 2010. The following information relating to Machine #201 was gathered at the end of May. Price.............................................................................\$85,000 Credit terms..............................................................2/10, n/30 Freight-in c

### Jon Seceda Furnace Corp: Depreciation Computations - Five Methods

Jon Seceda Furnace Corp. purchased machinery for \$315,000 on May 1, 2007. It is estimated that it will have a useful life of 10 years, salvage value of \$15,000, production of 240,000 units, and working hours of 25,000. During 2008 Seceda Corp. uses the machinery for 2,650 hours, and the machinery produces 25,500 units. Instr

### Change in Estimate-Depreciation

Frederick Industries changed from the double-declining balance to the straight-line method in 2010 on all its plant assets. There was no change in the asset's salvage values or useful lives. Plant assets, acquired on January 2, 2007 had an original cost of \$2,400,000, with a \$100,000 salvage value and an 8-year estimated useful

### Depreciation calculation methods (Kleener Co.)

Kleener Co. acquired a new delivery truck at the beginning of its current fiscal year. The truck cost \$26,000 and has an estimated useful life of four years and an estimated salvage value of \$4,000. A) Calculate depreciation expense for each year of the truck's life using 1. Straight-line depreciation. 2. Double declining

### Classic Irons depreciation; Smith Steakhouse gain; Staffing Co goodwill; Highland bond

1) Classic Irons, Inc. purchased manufacturing equipment with an expected useful life of five years or 5,000 hours of usage. The equipment was purchased on January 1, 2008, for \$460,000. It is expected to have a salvage value of \$60,000 at the end of five years. During 2008, the equipment was used for 1,200 hours. Assume that us

### Lehman Company: Depreciation Expense and Accum Depreciation

At the beginning of 2006, Lehman Company acquired equipment costing \$90,000. It was estimated that this equipment would have a useful life of 6 years and a residual value of \$9,000 at that time. The straight-line method of depreciation was considered the most appropriate to use with this type of equipment. Depreciation is to be