Kieso, Intermediate Accounting, 16e Intermediate Accounting (ACCT 3103 and 3113

Question

Kieso, Intermediate Accounting, 16e Intermediate Accounting (ACCT 3103 and 3113 CALCULATOR STANDARD VIEW PRINTER VERSION | BACK INCE NEXT Exercise 11-5 Robert Parish Corporation purchased a new machine for its assembly process on August 1, 2017. The cost of this machine was $117,900. The company estimated that the machine would have a salvage value of $12,900 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 21,000 hours. Year-end is December 31. Compute the depreciation expense under the following methods. Each of the following should be considered unrelated. (Round depreciation rate per hour to 2 decimal places,e.g. 5.35 for computational purposes. Round your answers to o decimal places, e.g. 45,892.) (a) Straight-line depreciation for 2017 (b) Activity method for 2017, assuming that machine usage was 800 hours (c) Sum-of-the-years'-digits for 2018 (d) Double-declining-balance for 2018 Click if you would like to Show Work for this question: Open Show Work SUB Question Attempts: O of 10 used SAVE FOR LATER SUBMIT ANSWER 1109 PM

Explanation / Answer

Ans. (a) Straight line depreciation: 2017 21000 * 5/12 (from august 1,2017 to december 31, 2017) 8750 Depreciation = Cost of asset - salvage value / useful life in years (117,900 - 12,900) / 5 21000 Ans. (b) Activity depreciation 2017 actual hours usage * 5 800 * 5 4000 Depreciation   = Cost of asset - salvage value / estimated hours (117,900 - 12,900) / 21,000 5 Ans. (c) Sum-of-the-year's-digits depreciation: 2018 34101 Sum of the years digits = n(n+1) / 2 1+2+3+4+5 = 5(5+1) / 2 15 year Total Allocated to 2017 2018 1 5/15 * (117,900 - 12,900) = 35000 14583 20417 2 4/15 * (117,900 - 12,900) = 28,000 11667 total of 2018 34101 *amount allocated for 2017 35000 * 5/12 = 14583 (from august 1,2017 to december 31, 2017) *amount allocated for 2018 (28000 * 5/12) + (35000 -14583.33) = 34101 Ans. (d) Double declining balance for 2018 39300 depreciation rate for double declining balance 2 * depreciation rate for straight line depreciation 2 * 20% 40% Calculation : 2017 Cost * 40% 117,900 * 40% * 5/12 (from august 1,2017 to december 31, 2017) 19650 2018 (Cost - depreciation in 2017) *40% (117,900 - 19,650) * 40% 39300 *depreciation rate for straight line depreciation : 100 / life in years 100 / 5 20%

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