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Chapter 10

# Chapter 10 - Exercise 10-1 Invoice price of machine Less...

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Exercise 10-1 Invoice price of machine. .................................. \$ 11,500 Less discount (.02 x \$11,500). ........................... (230 ) Net purchase price. ............................................ 11,270 Freight charges (transportation-in). ................ 260 Mounting and power connections. ................... 795 Assembly. ........................................................... 375 Materials used in adjusting. ............................. 30 Total cost to be recorded. ................................. \$ 12,730 Exercise 10-5 1. Straight-line (\$42,300 - \$6,000) / 10 years = \$3,630 2. Units-of-production Depreciation per unit = (\$42,300 - \$6,000) / 363,000 units = \$0.10 per unit For 35,000 units in second year: Depreciation = 35,000 x \$0.10 = \$3,500 3. Double-declining-balance Double-declining-balance rate = (100% / 10 years) x 2 = 20% per year First year’s depreciation = \$42,300 x 20% = \$8,460 Book value at beginning of second year = \$42,300 - \$8,460 = \$33,840 Second year’s depreciation = \$33,840 x 20% = \$6,768 Exercise 10-6 1. Straight-line depreciation for 2005 (\$250,000 - \$25,000) / 5 years = \$45,000 2. Double-declining-balance depreciation for 2004 Rate = (100% / 5 years) x 2 = 40% 2004 depreciation (\$250,000 x 40% x 9/12). ..................................... \$ 75,000 Book value at January 1, 2005 (\$250,000 - \$75,000). ....................... \$175,000 Depreciation for 2005 (\$175,000 x 40%). ......................................... \$ 70,000 Alternate calculation 2004 depreciation (\$250,000 x 40% x 9/12). ..................................... \$ 75,000 2005 depreciation \$250,000 x 40% x 3/12. .................................................................. \$ 25,000 (\$250,000 - \$75,000 - \$25,000) x 40% x 9/12. ............................... 45,000 Total 2005 depreciation. ..................................................................... \$ 70,000

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Exercise 10-7 1. Original cost of machine. ................................................... \$21,750
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Chapter 10 - Exercise 10-1 Invoice price of machine Less...

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