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chapter_9_example_1.pdf - Chapter 9 Example 1 Depreciation...

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Chapter 9 Example 1Depreciation ExamplesFerrellOn January 1, 2010Rose Corp acquires new equipment for $230,000.Theequipment has a useful life of 5 years and salvage value of $30,000.RoseCorp estimates the equipment can produce 80,000 units during its useful life.They expect to produce 20,000 units in its first year, 18,000 units in itssecond year, 32,000 units in its third year, and 5,000 units for both its fourthand fifth years.Rose Corp is considering which depreciation method to use.A)Prepare depreciation schedules for the equipment using:1.Straight-Line2.Double-Declining Balance3.Units-of –ActivityA1.Depreciation Schedule using Straight-Line MethodDepreciable Cost = Cost – Salvage =______________ =Useful life in YearsAnnualDepreciationAccumulatedYearExpenseDepreciationBook Value12-31-2010_________________________________12-31-2011_________________________________12-31-2012_________________________________12-31-2013_________________________________12-31-2014_________________________________
A2.Depreciation Schedule using Double Declining Balance MethodBook Value at Beginning of Year x DDB Rate = Annual DepreciationExpenseBook Value = Cost – Accumulated DepreciationDDB is Double Declining Balance Rate is twice the straight-line rate.
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Term
Fall
Professor
FERRELL
Tags
Depreciation, depreciation method, Rose Corp

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