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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This note was uploaded on 06/29/2008 for the course ACCT 220 taught by Professor William during the Spring '08 term at University of Findlay.

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

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