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Depreciation

# Depreciation - Problem1 a Depreciablecost=250003000=22,000...

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Problem 1 a) Depreciable cost = 25000-3000 = 22,000 Per unit depreciation = 22000/150000 = 0.147 (approx) Depreciation for: (to nearest dollar) 2012 = (22,000/150,000) x 50,000 = 7,333 2013 = (22,000/150,000) x 70,000 = 10,267 2014 = 22,000 – 7,333 – 10,267 or (22,000/150,000) x30, 000 = 4,400 b) Assets   =   Equity   Rev.    -     Exp.    =      Net Inc.    Cash Flow Purchase of Van & Revenue Recognition Cash + Book Value of van = Equity + Retained Earnings 46,000 + 17,667 = 50,000 + 13,667            Rev.        -            Exp.          =      Net Inc.                             Cash flow 21,000 – 7,333 (dep) = 13,667   21,000 (rev) – 25,000 (van)= (4,000) c) Sale value – salvage value = 4,000 – 3,000 = 1,000 (gain)   Problem 2 Company A = Annual Depreciation = (54,000 -4,000)/5 = 10,000 Company B = Annual Depreciation = (2/5) Beginning Book Value Company C= (54,000-4,000)/200,000 = 0.25/hour depreciation a) Highest net income in 2012 = Company A b) Lowest net income in 2014 = Company A & C

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