C-10_PP_E_Depreciation_Examples_-Solutions - ACCT 100 Fall...

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Fall 2010 Chapter 9: Plant Assets, Natural Resources and Intangible Assets: Property, Plant and Equipment On January 1 st , 2000, Fog Covered Vineyards purchased a grape harvesting machine for $120,000. The company estimates it will sell the machine at the end of the 4 th year for $20,000. The machine is expected to harvest 50,000 tons of grapes over its useful life. The tonnage harvested each of the four years is as follows: Fiscal Year Tons of Grapes Harvested 2000 15,000 2001 20,000 2002 10,000 2003 5,000 a) Using the straight-line depreciation method, what would be the forklift's book value at the end of the second year? Annual Depreciation Rate w/ Straight-line method: ( 120k-20k)/ 5 = $25k annual depn. Exp. After two years of depreciation totaling $50k, the Net book value would be 120k-50k = $70k b) Using the units-of-production method , what would be the depreciation expense in 2000 and 2001? Depreciation rate = (120k – 20k)/50k tons of grapes = $2/ton
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C-10_PP_E_Depreciation_Examples_-Solutions - ACCT 100 Fall...

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