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acc422 e11-4e11-11e12-6e12-16

# acc422 e11-4e11-11e12-6e12-16 - Jon Seceda Furnace Corp...

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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. Original cost \$315,000 Less: Salvage value 15,000 Depreciation base \$300,000 useful life 10 depreciation charge for 2008 \$30,000 (b) Units-of-output. Original cost \$315,000 Less: Salvage value 15,000 Depreciation base \$300,000 Total units-of-output 240,000 Depreciation charge per units-of-output \$1.25 Machinery units produced 25,500 Depreciation charge for 2008 \$31,875 (c) Working hours. Original cost \$315,000 Less: Salvage value 15,000 Depreciation base \$300,000 Total working hours 25,000 Depreciation charge per units-of-output \$12.00 Machinery units produced 2,650 Depreciation charge for 2008 \$31,800 (d) Sum-of-the-years’-digits. Year Depreciation Base 1 \$300,000 10 10/55 2 300,000 9 9/55 (e) Declining-balance (use 20% as the annual rate). Year 2007 \$315,000 20% \$42,000 2008 273,000 20% 57,400 Remaining Life in Years Depreciation Fraction Book Value of Asset First Year Rate on Declining balance Depreciation expense

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e machinery \$36,364 \$278,636 \$50,909 \$227,727 \$42,000 \$273,000 99,400 215,600 Depreciation Expense Book value, End of year Balance accumulated depreciation Book Value, End of year
Machinery purchased for \$60,000 by Tom Brady Co. in 2003 was originally estimated to have a life of 8 years with a salvage value of \$4,000 at the end of tha time. Depreciation has been entered for 5 years on this basis. In 2008, it is determined that the total e life should be 10 years with a salvage value of \$4,500 at the end of that time. Assume straight-line depreciation.

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