223_Hwk_8_Solutions

# 223_Hwk_8_Solutions - HA 223 Fall 2006 Homework 8 Solution...

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HA 223 – Fall 2006 – Homework 8 – Solution M8–4. Machinery (original cost) \$21,500 Accumulated depreciation at end of third year Depreciation expense = (\$21,500 cost – \$1,500 residual value) x 1/4 years = \$5,000 Accumulated depreciation = \$5,000 annual depreciation expense x 3 yrs = 15,000 Net book value at the end of the third year \$6,500 M8–5. Machinery (original cost) \$21,500 Accumulated depreciation at end of first year: Depreciation expense = (\$21,500 – 0 acc. depr.) x 2 / 4 yrs. = \$10,750 10,750 Net book value at end of first year \$10,750 Machinery (original cost) \$21,500 Accumulated depreciation at end of second year Depreciation expense = (\$21,500 - 10,750 acc. depr.) x 2 / 4 = 5,375 Accumulated depreciation = Year 1, \$10,750 + Year 2, \$5,375 = 16,125 Net book value at end of second year \$5,375 Machinery (original cost) \$21,500 Accumulated depreciation at end of third year Depreciation expense = (\$21,500 - 16,125 acc. depr.) x 2 / 4 = 2,688 Accumulated depreciation = (\$16,125 + Year 3, \$2,688) = 18,813 Net book value at end of third year \$2,687 M8–6. Machinery (original cost) \$21,500 Accumulated depreciation at end of third year Depreciation expense per machine hour = (\$21,500 cost – \$1,500 salvage value) = \$1 per machine hour 20,000 machine hours Accumulated depreciation Yr 1 Yr 2 Yr 3 = \$1 depreciation expense per machine hr x (3,000+8,000+7,000) hrs = 18,000 Net book value at end of third year \$3,500

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M8–8. Store fixtures (original cost) \$6,200 Accumulated depreciation at end of tenth year Depreciation expense = (\$6,200 cost – \$200 residual value) x 1/12 years = \$500 Accumulated depreciation = \$500 annual depreciation expense x 10 yrs = 5,000 Net book value at end of tenth year (i.e., NBV immediately prior to sale) \$1,200 Journal entry to record the disposal is as follows. Cash (+A).
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## This homework help was uploaded on 02/19/2009 for the course HA 230 taught by Professor Davidlee during the Fall '06 term at Cornell.

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223_Hwk_8_Solutions - HA 223 Fall 2006 Homework 8 Solution...

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