Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!







Determine The Machine Depreciation

10.4.

Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $43,500. The machine's useful life is estimated at 10 years, or 385,000 units of product, with a $5,000 salvage value. During its second year, the machine produces 32,500 units of product.

Determine the machine’s second-year depreciation using the units-of-production method.

 
 

Units-of-production Depreciation

 

Choose Numerator:

/

Choose Denominator:

=

Annual Depreciation Expense

 

Cost minus salvage

/

Total units of production

=

Depreciation expense per unit

 

$38,500

/

385,000

=

$0.10

Year

Annual Production (units)

 

Depreciation Expense

 

2

32,500

 

$3,250

2. Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $43,500. The machine's useful life is estimated at 10 years, or 385,000 units of product, with a $5,000 salvage value. During its second year, the machine produces 32,500 units of product.

Determine the machine’s second-year depreciation using the double-declining-balance method.

 
 

Double-declining-balance Depreciation

 

Choose Factors:

x

Choose Factor(%)

=

Annual Depreciation Expense

 

Beginning book value

x

Double the straight-line rate

=

Depreciation expense

First year's depreciation

$43,500

x

20%

=

$8,700

Second year's depreciation

$34,800

x

20%

=

$6,960

3.

In early January 2015, NewTech purchases computer equipment for $154,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $25,000.

Prepare a table showing depreciation and book value for each of the four years assuming straight-line depreciation.

 

Straight-Line Depreciation

 

Choose Numerator:

/

Choose Denominator:

=

Annual Depreciation Expense

 

Cost minus salvage

/

Estimated useful life (years)

=

Depreciation expense

 

$129,000

/

4

=

$32,250

Year

Annual Depreciation

 

Year-End Book Value

 

2015

$32,250

 

$121,750

2016

32,250

 

89,500

2017

32,250

 

57,250

2018

32,250

 

25,000

Total

$129,000

   

4. On April 1, 2014, Cyclone’s Backhoe Co. purchases a trencher for $280,000. The machine is expected to last five years and have a salvage value of $40,000.

Compute depreciation expense for both years ending December 2014 and 2015 assuming the company uses the straight-line method.

 
 

Straight-line, partial-year depreciation

 

Choose Numerator:

/

Choose Denominator:

=

Annual Depreciation

 

Cost minus salvage

/

Estimated useful life (years)

=

Annual depreciation

 

$240,000

/

5

=

$48,000

Year

Annual Depreciation

x

Fraction of Year

=

Depreciation Expense

2014

$48,000

x

9/12

 

$36,000

2015

$48,000

x

12/12

 

$48,000

5. On April 1, 2014, Cyclone’s Backhoe Co. purchases a trencher for $280,000. The machine is expected to last five years and have a salvage value of $40,000. Compute depreciation expense for both years ending December 2014 and 2015 assuming the company uses the double-declining-balance method.

 
 

Double-declining-balance, partial-year depreciation

 

Depreciation for the Period

End of Period

Annual Period

Beginning of Period Book Value

Depreciation Rate

Partial Year

Depreciation Expense

Accumulated Depreciation

Book Value

2014

$280,000

40%

9/12

$84,000

$84,000

$196,000

2015

$196,000

40%

12/12

$78,400

$162,400

$117,600


-----------------------------------------------------------------------------------------------------------------------------------

6.
Apex Fitness Club uses straight-line depreciation for a machine costing $23,860, with an estimated four year life and a $2,400 salvage value. At the beginning of the third year, Apex determines that the machine has three more years of remaining useful life, after which it will have an estimated $2,000 salvage value.

(1)

Compute the machine’s book value at the end of its second year. 

 
 

Book Value at the End of Year 2:

 

Cost

$23,860

Accumulated depreciation 2 years

(10,730)

Book value at point of revision

13,130

(2)

Compute the amount of depreciation for each of the final three years given the revised estimates.

 
 

Revised Depreciation (Years 3-5)

 

Book value at point of revision

$13,130

Revised salvage value

(2,000)

Remaining depreciable cost

11,130

Years of life remaining

3

Revised annual depreciation years 3-5

$3,710


-----------------------------------------------------------------------------------------------------------------------------------

7.

Oki Company pays $264,000 for equipment expected to last four years and have a $29,000 salvage value. Prepare journal entries to record the following costs related to the equipment.

1.

During the second year of the equipment’s life, $22,000 cash is paid for a new component expected to increase the equipment’s productivity by 10% a year.

2.

During the third year, $6,250 cash is paid for normal repairs necessary to keep the equipment in good working order.

3.

During the fourth year, $14,870 is paid for repairs expected to increase the useful life of the equipment from four to five years.

Transaction

General Journal

Debit

Credit

1

Equipment

22,000

 
 

Cash

 

22,000

       

2

Repairs expense

6,250

 
 

Cash

 

6,250

       

3

Equipment

14,870

 
 

Cash

 

14,870


-----------------------------------------------------------------------------------------------------------------------------------

8.
On April 2, 2015, Montana Mining Co. pays $3,721,000 for an ore deposit containing 1,525,000 tons. The company installs machinery in the mine costing $213,500, with an estimated seven-year life and no salvage value. The machinery will be abandoned when the ore is completely mined. Montana begins mining on May 1, 2015, and mines and sells 166,200 tons of ore during the remaining eight months of 2015.

Prepare the December 31, 2015, entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine’s depletion. (Round your unit depreciation and depletion rates to 2 decimal places.)

Date

General Journal

Debit

Credit

Dec 31

Depletion expense—Mineral deposit

405,528

 
 

Accumulated depletion—Mineral deposit

 

405,528

       

Dec. 31

Depreciation expense—Machinery

23,268

 
 

Accumulated depreciation—Machinery

 

23,268


-----------------------------------------------------------------------------------------------------------------------------------

10.19.
Milano Gallery purchases the copyright on an oil painting for $418,000 on January 1, 2015. The copyright legally protects its owner for 10 more years. The company plans to market and sell prints of the original for 11 years.

Prepare entries to record the purchase of the copyright on January 1, 2015, and its annual amortization on December 31, 2015.

Date

General Journal

Debit

Credit

Jan 01

Copyright

418,000

 
 

Cash

 

418,000

       

Dec 31

Amortization expense—Copyright

41,800

 
 

Accumulated amortization—Copyright

 

41,800


-----------------------------------------------------------------------------------------------------------------------------------

Question 10-3A
[The following information applies to the questions displayed below.]

In January 2015, Mitzu Co. pays $2,600,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $644,000, with a useful life of 20 years and a $60,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $420,000 that are expected to last another 12 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $1,736,000. The company also incurs the following additional costs:

 
     

  Cost to demolish Building 1

$

328,400  

  Cost of additional land grading

 

175,400  

  Cost to construct new building (Building 3), having a useful life
    of 25 years and a $392,000 salvage value

 

2,202,000  

  Cost of new land improvements (Land Improvements 2) near Building 2
    having a 20-year useful life and no salvage value

 

164,000  

 

10.

Required:

1.

Allocate the costs incurred by Mitzu to the appropriate columns and total each column.

 
 

Allocation of Purchase Price

Appraised Value

Percent of Total Appraised Value

x

Total Cost of Acquisition

=

Apportioned Cost

 

Land

$1,736,000

62%

x

$2,600,000

=

$1,612,000

Building 2

644,000

23%

x

2,600,000

=

598,000

Land Improvements 1

420,000

15%

x

2,600,000

=

390,000

Totals

$2,800,000

100%

     

$2,600,000

 
 

Land

Building 2

 

Building 3

 

Land Improvements 1

Land Improvements 2

Purchase Price

$1,612,000

$598,000

 

$0

 

$390,000

$0

Demolition

328,400

0

 

0

 

0

0

Land grading

175,400

0

 

0

 

0

0

New building (Construction cost)

0

0

 

2,202,000

 

0

0

New improvements cost

0

0

 

0

 

0

164,000

Totals

$2,115,800

$598,000

 

$2,202,000

 

$390,000

$164,000


11.

2.

Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1, 2015.

Date

General Journal

Debit

Credit

Jan 01

Land

2,115,800

 
 

Building 2

598,000

 
 

Building 3

2,202,000

 
 

Land improvements 1

390,000

 
 

Land improvements 2

164,000

 
 

Cash

 

5,469,800


12.

3.

Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the 12 months of 2015 when these assets were in use.

Date

General Journal

Debit

Credit

Dec 31

Depreciation expense—Building 2

26,900

 
 

Accumulated depreciation—Building 2

 

26,900

       

Dec 31

Depreciation expense—Building 3

72,400

 
 

Accumulated depreciation—Building 3

 

72,400

       

Dec 31

Depreciation expense—Land improvements 1

32,500

 
 

Accumulated depreciation—Land improvements 1

 

32,500

       

Dec 31

Depreciation expense—Land improvements 2

8,200

 
 

Accumulated depreciation—Land improvements 2

 

8,200


-----------------------------------------------------------------------------------------------------------------------------------

10.4A.

Champion Contractors completed the following transactions and events involving the purchase and operation of equipment in its business.

 

2014

Jan.

1  

Paid $287,600 cash plus $11,500 in sales tax and $1,500 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $20,600 salvage value. Loader costs are recorded in the Equipment account.

Jan.

3  

Paid $4,800 to enclose the cab and install air-conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $1,400.

Dec.

31  

Recorded annual straight-line depreciation on the loader.

     

2015

Jan.

1  

Paid $5,400 to overhaul the loader’s engine, which increased the loader’s estimated useful life by two years.

Feb.

17  

Paid $820 to repair the loader after the operator backed it into a tree.

Dec.

31  

Recorded annual straight-line depreciation on the loader.

     

Required:

Prepare journal entries to record these transactions and events.

Date

General Journal

Debit

Credit

Jan 01, 2014

Equipment

300,600

 
 

Cash

 

300,600

       

Jan 03, 2014

Equipment

4,800

 
 

Cash

 

4,800

       

Dec 31, 2014

Depreciation expense—Equipment

70,850

 
 

Accumulated depreciation—Equipment

 

70,850

       

Jan 01, 2015

Equipment

5,400

 
 

Cash

 

5,400

       

Feb 17, 2015

Repairs expense—Equipment

820

 
 

Cash

 

820

       

Dec 31, 2015

Depreciation expense—Equipment

43,590

 
 

Accumulated depreciation—Equipment

 

43,590


-----------------------------------------------------------------------------------------------------------------------------------

Question 10-6A
[The following information applies to the questions displayed below.]

Onslow Co. purchases a used machine for $178,000 cash on January 2 and readies it for use the next day at an $2,840 cost. On January 3, it is installed on a required operating platform costing $1,160, and it is further readied for operations. The company predicts the machine will be used for six years and have a $14,000 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of.

14.

Required:

1.

Prepare journal entries to record the machine’s purchase and the costs to ready and install it. Cash is paid for all costs incurred.

Date

General Journal

Debit

Credit

Jan 02

Machinery

178,000

 
 

Cash

 

178,000

       

Jan 03

Machinery

2,840

 
 

Cash

 

2,840

       

Jan 03

Machinery

1,160

 
 

Cash

 

1,160


15.

2.

Prepare journal entries to record depreciation of the machine at December 31.

(a)

Its first year in operations.

Date

General Journal

Debit

Credit

Dec 31

Depreciation expense—Machinery

28,000

 
 

Accumulated depreciation—Machinery

 

28,000

(b)

The year of its disposal.

Date

General Journal

Debit

Credit

Dec 31

Depreciation expense—Machinery

28,000

 
 

Accumulated depreciation—Machinery

 

28,000


16.

3.

Prepare journal entries to record the machine’s disposal under each of the following separate assumptions:

(a)

It is sold for $15,000 cash.

Date

General Journal

Debit

Credit

Dec 31

Cash

15,000

 
 

Loss on sale of machinery

27,000

 
 

Accumulated depreciation—Machinery

140,000

 
 

Machinery

 

182,000

(b)

It is sold for $50,000 cash.

Date

General Journal

Debit

Credit

Dec 31

Cash

50,000

 
 

Accumulated depreciation—Machinery

140,000

 
 

Machinery

 

182,000

 

Gain on sale of machinery

 

8,000

(c)

It is destroyed in a fire and the insurance company pays $30,000 cash to settle the loss claim.

Date

General Journal

Debit

Credit

Dec 31

Cash

30,000

 
 

Accumulated depreciation—Machinery

140,000

 
 

Loss from fire

12,000

 
 

Machinery

 

182,000

10.2A.

A machine costing $257,500 with a four-year life and an estimated $20,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 475,000 units of product during its life. It actually produces the following units: 220,000 in 1st year, 124,600 in 2nd year, 121,800 in 3rd year, 15,200 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate—this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.)

 

Required:

Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method. (Round your per unit depreciation to 2 decimal places.)

 
 

Straight-Line Depreciation

Year

Depreciation Expense

1

$59,375

2

59,375

3

59,375

4

59,375

Total

$237,500

 
 

Units of Production

Year

Depreciable Units

Depreciation per unit

Depreciation Expense

1

220,000

$0.50

$110,000

2

124,600

$0.50

62,300

3

121,800

$0.50

60,900

4

8,600

$0.50

4,300

Total

475,000

 

$237,500

 
 
 

DDB Depreciation for the Period

End of Period

Year

Beginning of Period Book Value

Depreciation Rate

Depreciation Expense

Accumulated Depreciation

Book Value

1

$257,500

50

%

$128,750

$128,750

$128,750

2

128,750

50

%

64,375

193,125

64,375

3

64,375

50

%

32,188

225,313

32,187

4

32,187

50

%

12,187

237,500

20,000

Total

     

$237,500

   


-----------------------------------------------------------------------------------------------------------------------------------

18.

Diaz Company owns a milling machine that cost $250,000 and has accumulated depreciation of $182,000. Prepare the entry to record the disposal of the milling machine on January 3 under each of the following independent situations.

  

1.

The machine needed extensive repairs, and it was not worth repairing. Diaz disposed of the machine, receiving nothing in return.

2.

Diaz sold the machine for $35,000 cash.

3.

Diaz sold the machine for $68,000 cash.

4.

Diaz sold the machine for $80,000 cash.

Date

General Journal

Debit

Credit

Jan 03

Loss on disposal of milling machine

68,000

 
 

Accumulated depreciation—Milling machine

182,000

 
 

Milling machine

 

250,000

       

Jan 03

Cash

35,000

 
 

Loss on disposal of milling machine

33,000

 
 

Accumulated depreciation—Milling machine

182,000

 
 

Milling machine

 

250,000

       

Jan 03

Cash

68,000

 
 

Accumulated depreciation—Milling machine

182,000

 
 

Milling machine

 

250,000

       

Jan 03

Cash

80,000

 
 

Accumulated depreciation—Milling machine

182,000

 
 

Gain on sale of milling machine

 

12,000

 

Milling machine

 

250,000

10.5A.

Yoshi Company completed the following transactions and events involving its delivery trucks.

 

2014

Jan.

1  

Paid $20,515 cash plus $1,485 in sales tax for a new delivery truck estimated to have a five-year life and a $2,000 salvage value. Delivery truck costs are recorded in the Trucks account.

Dec.

31  

Recorded annual straight-line depreciation on the truck.

     

2015

Dec.

31  

Due to new information obtained earlier in the year, the truck’s estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,400. Recorded annual straight-line depreciation on the truck.

     

2016

Dec.

31  

Recorded annual straight-line depreciation on the truck.

Dec.

31  

Sold the truck for $5,300 cash.

     

Required:

Calculate depreciation for year 2015.

 
 
   

Total cost

$22,000

Less accumulated depreciation (from 2014)

4,000

Book value

18,000

Less revised salvage value

2,400

Remaining cost to be depreciated

15,600

Years of life remaining

3

Total depreciation for 2015

$5,200


Calculate book value and gain (loss) for sale of Truck on December, 2016.

 
 
   

Depreciation expense (for 2014)

$4,000

Depreciation expense (for 2015)

5,200

Depreciation expense (for 2016)

5,200

Accumulated depreciation 12/31/2016

14,400

Book value of truck at 12/31/2016

 

Total cost

$22,000

Accumulated depreciation

(14,400)

Book value 12/31/2016

$7,600

Loss on sale of truck

$2,300

Prepare journal entries to record these transactions and events.

Date

General Journal

Debit

Credit

Jan 01, 2014

Trucks

22,000

 
 

Cash

 

22,000

       

Dec 31, 2014

Depreciation expense—Trucks

4,000

 
 

Accumulated depreciation—Trucks

 

4,000

       

Dec 31, 2015

Depreciation expense—Trucks

5,200

 
 

Accumulated depreciation—Trucks

 

5,200

       

Dec 31, 2016

Depreciation expense—Trucks

5,200

 
 

Accumulated depreciation—Trucks

 

5,200

       

Dec 31, 2016

Cash

5,300

 
 

Accumulated depreciation—Trucks

14,400

 
 

Loss on disposal of trucks

2,300

 
 

Trucks

 

22,000

hihi

Download Sample Now

Earn back money you have spent on downloaded sample



Upload Document Document Unser Evaluion Get Money Into Your Wallet



Cite This work.

To export a reference to this article please select a referencing stye below.

Assignment Hippo (2021) . Retrive from http://assignmenthippo.com/sample-assignment/determine-the-machine-depreciation

"." Assignment Hippo ,2021, http://assignmenthippo.com/sample-assignment/determine-the-machine-depreciation

Assignment Hippo (2021) . Available from: http://assignmenthippo.com/sample-assignment/determine-the-machine-depreciation

[Accessed 19/06/2021].

Assignment Hippo . ''(Assignment Hippo,2021) http://assignmenthippo.com/sample-assignment/determine-the-machine-depreciation accessed 19/06/2021.


Want latest solution of this assignment

Want to order fresh copy of the Sample Template Answers? online or do you need the old solutions for Sample Template, contact our customer support or talk to us to get the answers of it.


Submit Your Assignment Here

AssignmentHippo Features

On Time Delivery

Our motto is deliver assignment on Time. Our Expert writers deliver quality assignments to the students.

Plagiarism Free Work

Get reliable and unique assignments by using our 100% plagiarism-free.

24 X 7 Live Help

Get connected 24*7 with our Live Chat support executives to receive instant solutions for your assignment.

Services For All Subjects

Get Help with all the subjects like: Programming, Accounting, Finance, Engineering, Law and Marketing.

Best Price Guarantee

Get premium service at a pocket-friendly rate at AssignmentHippo

FREE RESOURCES

  • Assignment Writing Guide
  • Essay Writing Guide
  • Dissertation Writing Guide
  • Research Paper Writing Guide

FREE SAMPLE FILE

  • Accounts
  • Computer Science
  • Economics
  • Engineering

Client Review

I was struggling so hard to complete my marketing assignment on brand development when I decided to finally reach to the experts of this portal. They certainly deliver perfect consistency and the desired format. The content prepared by the experts of this platform was simply amazing. I definitely owe my grades to them.

SUBSCRIBE NOW

Get healthy news, tips and problem solutions from assignment hippo experts.