UCB+UGBA102A+Topic06+Slides+Appendix (1)

UCB+UGBA102A+Topic06+Slides+Appendix (1) - = $3,500 per year

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Long-Term Assets UGBA102A Introduction to Financial Accounting Appendix
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UGBA102A Dennis Geyer 2 Review Problem 9 Bally Construction Company purchased a dump truck on January 2, 2005 for $19,500. The truck’s expected useful life was five years and had a residual value of $2,000. The company’s engineers estimated that the truck would have a useful life of 9,000 hours. It was used for 2,200 hours in 2005, 2,000 hours in 2006, 1,900 hours in 2007, 1,400 hours in 2008, and 1,500 hours in 2009. The company’s fiscal year ends on December 31. Required: 1. Compute the depreciation expense and carrying value for 2005 to 2009 using the straight-line and units-of-production methods. 2. If the company wanted to expense more of the truck in earlier years, which method would be preferable?
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UGBA102A Dennis Geyer 3 Review Problem 9 Straight-Line Depreciation Depreciation = ($19,500 - $2,000) / 5 yrs
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Unformatted text preview: = $3,500 per year Units-of-Production Depreciation Depreciation Charge = ($19,500 - $2,000) / 9,000 hrs = $1.944 per hour UGBA102A Dennis Geyer 4 Straight-Line Depreciation Schedule End of Year Calculation Depreciation Expense Accumulated Depreciation Carrying Value 19,500 $ 1 $17,500 x 1/5 3,500 $ 3,500 $ 16,000 $ 2 $17,500 x 1/5 3,500 $ 7,000 $ 12,500 $ 3 $17,500 x 1/5 3,500 $ 10,500 $ 9,000 $ 4 $17,500 x 1/5 3,500 $ 14,000 $ 5,500 $ 5 $17,500 x 1/5 3,500 $ 17,500 $ 2,000 $ 17,500 $ Units-of-Production Depreciation Schedule End of Year Calculation Depreciation Expense Accumulated Depreciation Carrying Value 19,500 $ 1 $1.944 x 2,200 4,278 $ 4,278 $ 15,222 $ 2 $1.944 x 2,000 3,889 $ 8,167 $ 11,333 $ 3 $1.944 x 1,900 3,694 $ 11,861 $ 7,639 $ 4 $1.944 x 1,400 2,722 $ 14,583 $ 4,917 $ 5 $1.944 x 1,500 2,917 $ 17,500 $ 2,000 $ 17,500 $...
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UCB+UGBA102A+Topic06+Slides+Appendix (1) - = $3,500 per year

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