Chapler 9 HW ? ? Not secure l ezto.mheducation.com/hm.tpx 0.52 polnts E9-6 Compu
ID: 2527208 • Letter: C
Question
Chapler 9 HW ? ? Not secure l ezto.mheducation.com/hm.tpx 0.52 polnts E9-6 Computing Depreclation under Alternative Methods [LO 9-3] Innovations Corporation bought a machine at the beginning of the year at a cost of $22,000. The estimated useful life was five years and the residual value was $2,000. Assume that the estimated productive life of the machine is 10,000 units. Expected annual production for year 1, 2,000 units, year 2, 3,000 units, year 3, 2,000 units; year 4, 2,000 units; and year 5, 1,000 units Required: 1. Complete a depreciation schedule for each of the alternative methods. (Do not round intermediate calculations.) a Straight-line ncome Statement Balance Sheet Year Depreciation Accumulated Book Value Depreciation At acquisition S 22,000 S 4,000 $ 22,000 4,000$ 22,000 $ 4,00022,000 S 4,00022,000 S 4,000$ 22,000Explanation / Answer
Answer 1 a
Depreciation as per SLM = (Cost - Residual value) / Estimated life = ($22,000 - $2,000) / 5 years = $4,000
Answer b
Depreciation as per unit of production = Depreciation per unit * Number of unit in year
Depreciation per unit = (Cost - Residual value) / Estimated productive life
= ($22,000 - $2,000) / 10,000 units = $2 per unit.
Answer c
Depreciation as per double decline balance method = 2 * SLM rate * Book value at the beginning of the year
SLM rate = 1 / estimated life = 1 /5 = 20 % , DDB rate = 20 *2 = 40 %
Note ** - Under double decline method book value cannot be less than residual value , thus max depreciation in year 5 can be $851
Year Depreciation Expense ($) Cost ($) Accumulated Depreciation ($) Book Value ($) At Acquisition 22,000 1 4,000 22,000 4,000 18,000 2 4,000 22,000 8,000 14,000 3 4,000 22,000 12,000 10,000 4 4,000 22,000 16,000 6,000 5 4,000 22,000 20,000 2,000Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.