# Using the double declining balance method the book

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36. Using the double-declining balance method, the book value at December 31, 2014, would be: A. \$14,400. B. \$24,960. C. \$27,360. D. \$25,920. Book value, 12/31/2014 = \$72,000 - 28,800 -17,280 = \$25,920 AACSB: Analytic AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods. Spiceland - Chapter 11 #36 Topic: Determine periodic depreciation using both time-based and activity-based methods

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37. Using the sum-of-the-years'-digits method, depreciation for 2013 and book value at December 31, 2013, would be: Depreciation, 2013 = (\$72,000 - 6,000) x 5/15 = \$22,000 Book value, 12/31/2013 = \$72,000 - 22,000 = \$50,000 AACSB: Analytic AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods. Spiceland - Chapter 11 #37 Topic: Determine periodic depreciation using both time-based and activity-based methods
38. Using the sum-of-the-years'-digits method, depreciation for 2014 and book value at December 31, 2014, would be: Depreciation, 2014 = (\$72,000 - 6,000) x 4/15 = \$17,600 Book value, 12/31/2014 = \$72,000 - 22,000 - 17,600 = \$32,400 AACSB: Analytic AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods. Spiceland - Chapter 11 #38 Topic: Determine periodic depreciation using both time-based and activity-based methods On June 30, 2013, Prego Equipment purchased a precision laser-guided steel punch that has an expected capacity of 300,000 units and no residual value. The cost of the machine was \$450,000 and is to be depreciated using the units-of-production method. During the six months of 2013, 24,000 units of product were produced. At the beginning of 2014, engineers estimated that the machine can realistically be used to produce only another 230,000 units. During 2014, 70,000 units were produced. Spiceland - Chapter 11

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39. Prego would report depreciation in 2013 of: Depreciation in 2013 = (\$450,000 ÷ 300,000) = \$1.50 per unit x 24,000 = \$36,000 AACSB: Analytic AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods. Spiceland - Chapter 11 #39 Topic: Determine periodic depreciation using both time-based and activity-based methods 40. Prego would report depreciation in 2014 of: A. \$135,230. B. \$126,000. C. \$108,000. D. \$105,000. Depreciation in 2014 = [(\$450,000 - 36,000) ÷ (230,000)] = \$1.80 per unit x 70,000 = \$126,000 AACSB: Analytic AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 11-02 Determine periodic depreciation using both time-based and activity-based methods. Learning Objective: 11-05 Explain the appropriate accounting treatment required when a change is made in the service life or residual value of property; plant; and equipment and intangible assets.
Spiceland - Chapter 11 #40 Topic: Determine periodic depreciation using both time-based and activity-based methods Topic: Explain the appropriate accounting treatment required when a change is made in the service life or residual value of PP & E and intangible assets Archie Co. purchased a framing machine for \$45,000 on January 1, 2013. The machine is expected to have a four-year life, with a residual value of \$5,000 at the end of four years.

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