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# Depreciation

### 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

### Differences between 'allowed and 'allowable' depreciation

What are the differences between "allowed depreciation" and "allowable depreciation"? What effects do allowed depreciation and allowable depreciation have on adjusted basis?

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

### When the sum-of-the-years'-digits method is used, depreciation expense for a given asset will

Multiple Choice - Tangible and Intangible Assets. Choose the best answer for each of the following questions and enter the identifying letter in the space provided. 1. When the sum-of-the-years'-digits method is used, depreciation expense for a given asset will a. decline by a constant amount each year. b. be the same ea

### 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

### Double Declining Method of Depreciation

Marsh Corporation purchased factory equipment that was installed and put into service January 2, 2004, at a total cost of \$90,000. Salvage value was estimated at \$6,000. The equipment is being depreciated over four years using the double-declining balance method. For the year 2005, Marsh should record depreciation expense on thi

### 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

### Sec. 179 Expensing Election and MACRS Depreciation. Calculate depreciation for Ted's real estate business and for his rental property.

Ted is in the real estate business and owns rental property. On May 12, 2007, Ted purchased a small apartment building for \$200,000 (\$180,000 for the building and \$20,000 for the land). In addition, Ted purchased equipment (5-year recovery) costing \$60,000 on April 10,2007, and machinery (7-year recovery) costing \$80,000 on Nove

### 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

### Different Methods of Depreciation - Jackel Industries

Jackel Industries presents you with the following information Acc Dep Date Salvage Life in Depreciation To Depreciation Description Purchased Cost Value Years Method 12/31/2007 for 2008 Machine A 2/12/2006 142500 16000 10 (a) 33350 (b) Machine B 8/15/2005 (c) 21000 5 SL 29000 (d) Machine C 7/21/2004

### Calculate cash flow and depreciation: Menendez Corporation

3-7 The Menendez Corporation expects to have sales of twelve million. Costs other than depreciation are expected to be 75% of sales, and depreciation is expected to be 1.5 million. All sales revenues will be collected in cash and costs other than depreciation must be paid off during the year. Menendez federal plus state ta

### Applicable Methods of Depreciation

1. There are several different methods of depreciation for assets. Which is the most accurate in the following situations and why? a. A machine used to make widgets in a factory. b. A delivery truck that only makes in town deliveries. c. A 737 Airplane. 2. Why is there mark to market for securities but not other assets

### Depreciation Calculation methods

Depreciation calculation methods. Hill Co. acquired a new delivery truck at the beginning of its current fiscal year. The following information is available cost \$ 100,000 estimated useful life 6 years estimated salvage value \$ 7,000 Required: a. C

### Two Different Depreciation Methods

Is it appropriate to calculate depreciation using two different methods? Why or why not?

### Depreciation by straight line method

1 have trouble figuring out theses two problems dealing with depreciated by straight line method. 1) Equipment cost of \$120,000 has a estimated residual value of \$10,000 and a estimated life of 5yrs or 12,000hrs. It is to be depreciated by the straight line method. What is the amount of depreciation for the first full year du

### Taxation topics: AMT, deductions, casualty, like kind exchange, depreciation

1. When a state decouples from a Federal tax provision, it means that this provision will not apply for state income tax purposes. Answer: True or False 2. For a person who is in the 35% marginal tax bracket, \$1,000 of tax-exempt income and \$1,538 [\$1,000/(1 - .35)] of taxable income yield the same after-tax income. Answer: T

### First two years depreciation

For this one I used a cost of 550+8+2 and I got stuck there, what is salvage value? Lite Co. purchased a new machine on January 2, 2007 for \$550,000. The company paid freight on the machine of \$8,000 and incurred \$2,000 in setting up the machine. The machine had a useful life of 5 years and a salvage value of \$10,000. Determi

### The Jupiter Corporation has a gross profit of \$700,000 and \$240,000 in depreciation expense.

The Jupiter Corporation has a gross profit of \$700,000 and \$240,000 in depreciation expense. The Saturn Corporation also has \$700,000 in gross profit, with \$40,000 in depreciation expense. Selling and administrative expense is \$160,000 for each company. Given the tax rate is 40 percent, compute cash flow for both companies. E

### Straight-line, Sum of Year, Double Declining

On July 1, 2006, Nyland Company purchased for \$2,160,000 snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of \$90,000. Depreciation is taken for the portion of the year the asset is used. Determine the depreciation expense and year-end book values for 2006 and 2007 using the Sum

### Depreciation Calculation: Change in Useful Life and Salvage Value

Machinery purchased for \$60,000 by Tom Brady Co. in 2003 (Joe Montana Co. in 2000) was originally estimated to have a life of 8 years with a salvage value of \$4,000 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2008, it is determined that the total estimated life should be 10 years with a s

### Depreciation - Wheeler Bus Lines

Wheeler Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2006, at a cost of \$148,000. Over its 4-year useful life, the bus is expected to be driven 100,000 miles. Salvage value is expected to be \$8,000. Instructions (a) Compute the depreciation cost per unit. (b) Pre