On January 3, 2011, Robby%u2019s Excavating Company purchased a bulldozer for $1
ID: 2375008 • Letter: O
Question
On January 3, 2011, Robby%u2019s Excavating Company purchased a bulldozer for $140,000. In addition to the basic purchase price, the company paid sales tax of $6,000 and freight charges of $8,000. The bulldozer will be used for 36,000 machine hours. Robby estimates that the bulldozer will have a useful life of 5 years and no residual value.
Required:
I. Compute the cost of the asset.
II. Compute the depreciation expense for 2011 and 2012 using the:
i. straight-line method
ii. units-of production method assuming the bulldozer was used 5,000 machine hours in 2011 and 20,000 machine hours in 2012.
iii. double declining balance metho
Explanation / Answer
Straight line (140,000+6,000+8,000)/5= 30,800 per year for 2011 and 2012
Units of production (154,000)/36,000= 4.28 per hour
2011 4.28* 5000= 21,400 2012 20,000*4.28= 85,600
DDB 154,000* 2/5= 61,600 for 2011
(154,000-61,600)*2/5= 36,960 for 2012
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.