Project #88714 - Revision of Depreciation

Revision of Depreciation

A building with a cost of $720,000 has an estimated residual value of $288,000, has an estimated useful life of 18 years, and is depreciated by the straight-line method.

a.  What is the amount of the annual depreciation?
$

b.  What is the book value at the end of the tenth year of use?
$

c.  If at the start of the eleventh year it is estimated that the remaining life is 10 years and that the residual value is $200,000, what is the depreciation expense for each of the remaining 10 years? 
$

 

Partial-Year Depreciation

Sandblasting equipment acquired at a cost of $84,000 has an estimated residual value of $5,000 and an estimated useful life of 5 years. It was placed in service on April 1 of the current fiscal year, which ends on December 31.

If necessary, round your answers to the nearest cent.

a.  Determine the depreciation for the current fiscal year and for the following fiscal year by the straight-line method.

  Depreciation
Year 1 $
Year 2 $

b.  Determine the depreciation for the current fiscal year and the following fiscal year by the double-declining-balance method.

  Depreciation
Year 1 $
Year 2 $

 

 

Comparing Three Depreciation Methods

Newbirth Coatings Company purchased waterproofing equipment on January 2, 2011, for $460,400. The equipment was expected to have a useful life of four years, or 8,800 operating hours, and a residual value of $38,000. The equipment was used for 3,300 hours during 2011, 2,700 hours in 2012, 1,600 hours in 2013, and 1,200 hours in 2014.

Required:

1.  Determine the amount of depreciation expense for the years ended December 31, 2011, 2012, 2013, and 2014, by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method. 

Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.

Depreciation Expense
Year Straight-Line Method Units-of-Output Method Double-Declining-Balance Method
2011 $ $ $
2012 $ $ $
2013 $ $ $
2014 $ $ $
Total $ $ $

2.  What method yields the highest depreciation expense for 2013?

3.  What method yields the most depreciation over the four-year life of the equipment?

Subject Business
Due By (Pacific Time) 10/30/2015 12:00 am
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