Chapter 11 Additional Depreciation Problems with Solutions

Chapter 11 Additional Depreciation Problems with Solutions...

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Problem 1 —Calculate depreciation. A machine which cost $200,000 is acquired on October 1, 2006. Its estimated salvage value is $20,000 and its expected life is eight years. Instructions Calculate depreciation expense for 2006 and 2007 by each of the following methods, showing the figures used. (a) Double-declining balance (b) Sum-of-the-years'-digits Solution Problem 1 (a) 2006: 25% × $200,000 × ¼ = $12,500 2007: 25% × $187,500 = $46,875 (b) 2006: 8/36 × $180,000 × ¼ = $10,000 2007: 8/36 × $180,000 × ¾ = $30,000 7/36 × $180,000 × ¼ = 8,750 $38,750 Problem 2 —Calculate depreciation. A machine cost $500,000 on April 1, 2006. Its estimated salvage value is $50,000 and its expected life is eight years. Instructions Calculate the depreciation expense (to the nearest dollar) by each of the following methods, showing the figures used. (a) Straight-line for 2006 (b) Double-declining balance for 2007 (c) Sum-of-the-years'-digits for 2007 Solution Problem 2 (a) 1/8 × $450,000 × ¾ = $42,188 (b) 2007: 25% × $406,250 = $101,563 (c) 8/36 × $450,000 × ¼ = $25,000 7/36 × $450,000 × ¾ = 65,625 $90,625
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Problem 3 —Asset depreciation and disposition. Answer each of the following questions.
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Chapter 11 Additional Depreciation Problems with Solutions...

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