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Week 4 - Individual Assignments - David Trejo

# Week 4 - Individual Assignments - David Trejo -...

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E11-4 (Depreciation Computations—Five Methods) Jon Seceda Furnace Corp. purchased machinery for \$315,000 on May 1, 2007. It is estimated that it will have a useful life of 10 years, salvage value of \$15,000, production of 240,000 units, and working hours of 25,000. During 2008 Seceda Corp. uses the for 2,650 hours, and the machinery produces 25,500 units. Instructions From the information given, compute the depreciation charge for 2008 under each of the following methods. (Round to the nearest dollar.) (a) Straight-line. \$315,000 – \$15,000 = \$300,000 (b) Units-of-output. \$300,000 ÷ 240,000 units = \$1.25 (c) Working hours. \$300,000 ÷ 25,000 hours = \$12.00 per hr. (d) Sum-of-the-years’-digits. 10 + 9 + 8 + 7 + 6 + 5 + 4 + 3 + 2 + 1 = 55 (10/55) * 300,000 * 1/3 = \$18,182 (9/55) * 300,000 * 2/3 = \$32,727 (e) Declining-balance (use 20% as the annual rate). \$315,000 * 20% * 1/3 = \$21,000 [\$315,000 – (\$315,000 X 20%)] X 20% X 2/3 = \$33,600 \$300,000 ÷ 10 yrs. = \$30,000 25,500 units X \$1.25 = \$31,875 2,650 hrs. X \$12.00 = \$31,800 \$18,182 + \$32,727 = \$50,909 \$21,000 + \$33,600 = \$54,600

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E11-11 (Depreciation—Change in Estimate) Machinery purchased for \$60,000 by Tom Brady C 2003 was originally estimated to have a life of 8 years with a salvage value of \$4,000 at the end time. Depreciation has been entered for 5 years on this basis. In 2008, it is determined that the to

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Week 4 - Individual Assignments - David Trejo -...

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