Question 9 (12 points) Alpha Company has the following items in its equipment ac
ID: 2403234 • Letter: Q
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Question 9 (12 points) Alpha Company has the following items in its equipment account: Asset & Date Purchased Method of Depreciation Cost Salvage Value Delivery Truck (4/30/15) Unit of Activity $60,000 1. $%11,000 Office Furniture 2. (6/1/15) traight Lne $15,000$300 Double 3. Computer (4/1/15) Dcining $5,000 $700 The delivery truck is estimated to have a life cycle of 200,000 miles. It was driven for 1. 16,500 miles in 2015 & 24,600 miles in 2016&25,000 miles in 2017 2. The Office Furniture has a life expectancy of 7 years 3. The Computer has a life expectancy of 4 years. ound any per unit calculations to the nearest half penny. Round all annual depreciation expenses to the nearest dollar. Use this information to compute for Fiscal Year 2017 the following values: edExplanation / Answer
1. Book Value of the delivery truck:
Depreciable amount = Cost - Salvage Value = $ 60,000 - $ 11,000 = $ 49,000.
Rate of depreciation per mile = $ 49,000 / 200,000 = $ 0.245.
Accumulated depreciation at the end of 2017 = ( 16,500 + 24,600 + 25,000) x $ 0.245 = $ 16,194.50
Book value as aon December 31, 2017 = $ 60,000 - $ 16,194.50 = $ 43,805.50.
2. Depreciation expense : Truck for 2017 = 25,000 x $ 0.245 = $ 6,125.
3. Book Value of Office Furniture:
Annual depreciation = ($ 15,000 - $ 300) / 7 = $ 2,100
Accumulated depreciation as on December 31, 2017 = 7/12 x $ 2,100 + $ 2,100 x 2 = $ 5,425.
Book value as on December 31, 2017 = $ 15,000 - $ 5,425 = $ 9,575.
4. Depreciation Expense: Office Furniture = $ 2,100.
5. Book Value of the Computer: $ 781.25
Annual depreciation rate = 100 / 4 x 2 = 50 %.
Accumulated depreciation as on December 31, 2017 = $ ( 5,000 x 50 % x 9/12) + $ ( 5,000 - 1,875) x 50% + $ ( 5,000 - 1,875 - 1,562.50) x 50 % = 1,875 + 1,562.50 + 781.25 = $ 4,218.75
Book value of the computer = $ 5,000 - $ 4,218.75 = $ 781.25
6. Depreciation Expense : Computer = $ 781.25 - $ 700 = $ 81.25.
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