W4 Individual Assignment

# W4 Individual Assignment - E11-4(Depreciation...

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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 machinery 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. Cost 315,000 Salvage 15,000 Basis 300,000 Useful life 10 years \$30,000 (b) Units-of-output. Basis 300,000 Est. units 240,000 Depr./unit 1.25 2008 units 25,500 \$31,875 (c) Working hours. Basis 300,000 Est. hours 25,000 Depr./unit 12.00 2008 hours 2,650 \$31,800 (d) Sum-of-the-years’-d 55 1st year 18,182 2nd year 32,727 \$50,909 (e) Declining-balance (use 20% as the annual rate). 1st year 21,000 2nd year 33,600 \$54,600

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E11-11 (Depreciation—Change in Estimate) 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 that time. Depreciation has been entered for 5 years on this basis. In 2008, it is determined that the total estimated life should be 10 years with a salvage value of \$4,500 at the end of that time. Assume straight-line depreciation. Instructions (a) Prepare the entry to correct the prior years’ depreciation, if necessary. No entry required.
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W4 Individual Assignment - E11-4(Depreciation...

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