There are four problems. Each one is worth the score indicated next to the probl

Question

There are four problems. Each one is worth the score indicated next to the problem number Show all work for complete credit. You may attach extra pages if you v. desire. be NEAT when writing your answers. I cannot grade illegible answers. Problems portion of the test is worth a total of 30 points. 1. Brenan. Inc. purchased equipment at the beginning of 2004 for S2.100,000. Brenan. The equipment has an estimated residual value (value) of S100.000 and an estimated life of 5 years or 100.000 hours of operation. The machinery was operated for 15.000 hours in 2004,20.000 hours in 2005. 35.000 hours in 2006. 20.000 hours in 2007. and 10,000 hours in 2O08. Create a depreciation schedule for each of the following depreciation methods for the 2004 to 2008:1. Straight-line depreciation method 2. Units-of-production method 3. Double-declining-balance depreciation method a. Straight-Line b. Units-of-Production c. Double-Declining Balance

Explanation / Answer

Details Equipment Cost     2,100,000 Less Salvage           100,000 Depreciable Value     2,000,000 Useful life in years                      5 SL depreciation per year         400,000 DD balance depreciation rate   40% Total Production Hours in life         100,000 Depreciation per prodcution hr                   20 Depreciation Schedules a SL method Year Cost Book Value Begiinning Depreciation Expense Accumulated depreciation Book Value ending                                                         2,004     2,100,000     2,100,000    400,000       400,000            1,700,000                                                         2,005     2,100,000     1,700,000    400,000       800,000            1,300,000                                                         2,006     2,100,000     1,300,000    400,000 1,200,000                900,000                                                         2,007     2,100,000         900,000    400,000 1,600,000                500,000                                                         2,008     2,100,000         500,000    400,000 2,000,000                100,000 b Units of production Year Cost Book Value Begiinning Hours of operation Depreciation rate /hr Depreciation Expense Accumulated depreciation Book Value ending                                                         2,004                    -       2,100,000      15,000                 20                300,000         300,000        1,800,000                                                         2,005     2,100,000     1,800,000      20,000                 20                400,000         700,000        1,400,000                                                         2,006     2,100,000     1,400,000      35,000                 20                700,000     1,400,000            700,000                                                         2,007     2,100,000         700,000      20,000                 20                400,000     1,800,000            300,000                                                         2,008     2,100,000         300,000      10,000                 20                200,000     2,000,000            100,000 c Double declining method Year Cost Book Value Begiinning Depreciation %   Depreciation Expense Accumulated depreciation Book Value ending                                                         2,004     2,100,000     2,100,000 40%       840,000                840,000     1,260,000                                                         2,005     2,100,000     1,260,000 40%       504,000            1,344,000         756,000                                                         2,006     2,100,000         756,000 40%       302,400            1,646,400         453,600                                                         2,007     2,100,000         453,600 40%       181,440            1,827,840         272,160                                                         2,008     2,100,000         272,160 40%       172,160            2,000,000         100,000

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