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Depreciation

Calculation of interest expense & depreciation

If a company has an operating income of $700,000, net income of $200,000 and net cash flow after taxes of $450,000 and is in the 50% tax bracket, what combination of interest expense and depreciation expense would the company have?

Capital Expenditure for Tertiary Care Hospital

See the attached file. You are the CFO of a 720-bed tertiary care hospital. You have been presented with a capital expenditure request for a state-of-the-art MRI machine to be purchased on 01-01-09 for a cost of $1,250,000 with a useful life of 6 years and an expected salvage value of $35,000. Calculate depreciation fo

Depreciation SL, SYD, and DDB methods

You are the CFO of a 720-bed tertiary care hospital. You have been presented with a capital expenditure request for a state-of-the-art MRI machine to be purchased on 01-01-09 for a cost of $1,250,000 with a useful life of 6 years and an expected salvage value of $35,000. Calculate depreciation for the entire 6 year

Bickner Company: Depreciation Methods

Bickner Company changed depreciation methods in 2008 from double-declining-balance to straight-line. Depreciation under double-declining-balance was $90,000, whereas straight-line depreciation prior to 2008 would have been $50,000. Bickner's depreciable asset had a cost of $250,000 with a $50,000 salvage value, and an 8-year rem

Computing Depreciation using SL and Units of Activity

Wichita Clinic purchased a new surgical laser for $84,000. The estimated salvage value is $4,000. The laser has a useful life of five years and the clinic expects to use it 10,000 hours. It was used 1,600 hours in year 1; 2,100 hours in year 2; 2,400 hours in year 3; 1,900 hours in year 4; 2,000 hours in year 5. Instructions

Depreciation in Tax and Stockholder Reporting

For 2007, Rico Metals reported $9000 of sales, $6000 of operating costs other than depreciation and $1500 of depreciation. The company had no amortization charges, it had issued $4000 of bonds that carry a 7% interest rate and its federal-plus-state income tax rate was 26%. 2008 data are expected to remain unchanged except for o

Depreciation for partial periods: Boris Becker, Inc

Need Help with following problem: The cost of equipment purchased by Boris Becker, Inc., on June 1, 2007 is $67,000. It is estimated that the machine will have a $4,000 salvage value at the end of its service life. Its service life is estimated at 7 years; its total working hours are estimated at 42,000 and its total product

Depreciation Expense for Boris Becker

The cost of equipment purchased by Boris Becker, Inc., on June 1, 2007 is $67,000. It is estimated that the machine will have a $4,000 salvage value at the end of its service life. Its service life is estimated at 7 years; its total working hours are estimated at 42,000 and its total production is estimated at 525,000 units. Dur

Depreciation True or False

The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset. True or False The safeguarding of assets is an objective of a company's system of internal control. True or False Accounts receivable are one of a company's least liquid assets. True or False The direct write-off method

Depreciation of Costs of Goods

Use the following information for questions 26 through 30. The following data are provided: December 31 2008 2007 Cash $ 375,000 $ 250,000 Accounts receivable (net) 400,000 300,000 Inventories 650,000 550,000 Plant assets (net) 2,000,000 1,625,000 Accounts payable 275,000 200,000 Taxes

Pyle Inc: Recovery deduction and regular depreciation

Pyle Inc., a calendar year taxpayer, generated over $10 million taxable income in 2008. Pyle made one asset purchase: transportation equipment costing $177,150. The equipment has a 5-year recovery period and was placed in service on February 9. Assuming that Pyle made the Section 179 election with respect to the equipment, co

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 250,000 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. From

Depreciation for Fractional Years

On August 3, Srini Construction purchased special purpose equipment at a cost of $1,000,000. The useful life of the equipment was estimated to be 8 years, with a residual value of $50,000. a) Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the straight-line depreciati

Compute the composite depreciation rate

Sport Inc. owns the following assets: Asset Cost Salvage Est useful life A $70,000 $7,000 10 yrs B 50,000 10,000 5 yrs C 82,000 4,000 12 yrs Compute the composite depreciation rate and the composit

Depreciation adjusting entry

Accumulated depreciation- equipment 1/1/07 was $250,000. At 12/31/07 the balance of the account was $390,000. during 2007, one piece of equipment was sold. The equipment had an original cost of $40,000 and was 1/4 depreciated when sold. Prepare the missing adjusting entry.

Computation of the depreciation

Machinery is purchased on July 1 of the current fiscal year for $180,000. It is expected to have a useful life of 4 years, or 20,000 operating hours, and a residual value of $20,000. Compute the depreciation for the last six months of the current fiscal year ending December 31 by each of the following methods: (a) straight-l

A high-speed multiple-bit drill press costing $300,000 has an estimated salvage value of $25,000 and a life of ten years. What is the annual depreciation for each of the first two full years under

I need help with these questions. Depreciation Methods. A high-speed multiple-bit drill press costing $300,000 has an estimated salvage value of $25,000 and a life of ten years. What is the annual depreciation for each of the first two full years under the following depreciation methods? 1. Double-declining-balance metho

Straight line depreciation

Fundamental Accounting Principals, 18th Edition Wild, Larson, Chiappetta, McGraw-Hill Irwin Problem 10-1B: Plant asset costs; depreciation methods. Nagy Company negotiates a lump-sum purchase of several assets from a contractor who is relocating. The purchase is completed on January1, 2008, at a total cash price of $1,80

Depreciation Methods

A high-speed multiple-bit drill press costing $300,000 has an estimated salvage value of $30,000 and a life of ten years. What is the annual depreciation FOR THE SECOND YEAR OF USE under the following depreciation methods? 1. Double-declining-balance method: 2. Units of production (activity) method (lifetime output is est

Depreciation on Company Machinery

Quayle Company acquired machinery on January 1, 1999 which it depreciated under the straight-line method with an estimated life of fifteen years and no salvage value. On January 1, 2004, Quayle estimated that the remaining life of this machinery was six years with no salvage value. How should this change be accounted for by Quay

DOUBLE DECLINING BALANCE METHOD OF DEPRECIATION

Use of the double-declining balance method A. results in a decreasing charge to depreciation expense. B. means salvage value is not deducted in computing the depreciation base. C. means the book value should not be reduced below salvage value. D. all of these.

Amount to be capitalized as the cost of the machine

Denny Corporation purchased a new machine on October 31, 2004. A $1,400 down payment was made and three monthly installments of $4,200 each are to be made beginning on November 30, 2004. The cash price that would have been paid was $12,800. Denny paid no installation charges under the monthly payment plan but a $200 installation

Wichita Clinic Depreciation

Wichita Clinic purchased a new surgical laser for $84,000. The estimated salvage value is $4,000. The laser has a useful life of five years and the clinic expects to use it 10,000 hours. It was used 1,600 hours in year 1; 2,100 hours in year 2; 2,400 hours in year 3; 1,900 hours in year 4; 2,000 hours in year 5. Instructions

Depreciation: record no expense for 2008 - Evaluate argument

The managements of two different companies argue that because of specific conditions in their companies, recording depreciation expense should be suspended for 2008. Evaluate carefully their arguments. (a) The president of Guzman Co. recommends that no depreciation be recorded for 2008 because the depreciation rate is 5% per

Atwater Manufacturing: Compare three methods of depreciation for new machine

Atwater Manufacturing Company purchased a new machine especially built to perform one particular function on the assembly line. A difference of opinion has arisen as to the method of depreciation to be used in connection with this machine. Three methods are now being considered. (a) The straight-line method (b) The produ

Depreciation-Replacement, Change in estimate

Greg Maddox Company constructed a building at a cost of $2,200,000 and occupied it beginning in January 1988. It was estimated at that time that its life would be 40 years, with no salvage value. In January 2008, a new roof was installed at a cost of $300,000, and it was estimated then that the building would have a useful