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Solution Quiz#4

# Solution Quiz#4 - Solution Quiz#4 Problem I 1 E-Book value...

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Solution Quiz #4 Problem I. 1. E—Book value equals historical cost less accumulated depreciation. The historical value of the equipment is 169,000 (126,000+26,000+17,000). Based on straight-line we should depreciate 16,900 a year (169,000/10 years). Therefore at the end of the first year the book value is 152,100. 2. A—Remember we do not use the salvage value to calculate double-declining balance. We first calculate the straight-line rate (100%/5 years)=20%. We then double this amount, (2*20%)=40%. Next we calculate the depreciation for 2004 (625,000*40%=250,000). Then we calculate the depreciation for 2005 ((625,000- 250,000)*40%=150,000). Therefore, the total accumulated depreciation at the end of 2005 is 400,000 (250,000+150,000). 3. D—First we need to calculate the amount of depreciation expense removed from the accumulated depreciation account by selling PP&E. This is a plug figure. Accumulated depreciation removed=Ending Acc. Dep. –Beginning Acc. Dep. – Depreciation Expense (724,300-450,700-303,800=30,200). With this we can calculate the historical value of the equipment sold since the Book value of

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Solution Quiz#4 - Solution Quiz#4 Problem I 1 E-Book value...

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