MTEST-PART 1-CH, 6, 7, × ezto.mheducation.com/hm.tpx Banko Inc. manufactures Jan
ID: 2580274 • Letter: M
Question
MTEST-PART 1-CH, 6, 7, × ezto.mheducation.com/hm.tpx Banko Inc. manufactures January 1, 2016: sporting goods. The following information applies to a machine purchased Purchase price Delivery cost Installation charge Estimated life Estimated units Salvage estimate S 67,000 $ 3,000 144,000 S 6,000E 5 years $ 4,000 During 2016, the machine produced 40.000 units and dunng 2017, it produced 42,000 units. Required: ermine the amount of depreciation expense for 2016 and 2017 using straight-line method. 2016 2017 Depreciation expense b. Determine the amount of depreciation expense for 2016 and 2017 using double-declining-balance method 2016 2017 Depreciation expense c. Determine the amount of depreciation expense for 2016 and 2017 using units of production metho 2016 2017 Depreciation expense d. Determine the amount of cepreciaton expense for 2016 and 2017 using MACRS assuming that th machine is classified as seven-year property (Round your answers to the nearest dollar amourExplanation / Answer
a
purchase price
67000
delivery cost
6000
installation cost
3000
book value of machine
76000
2016
2017
Depreciation using straight line method
(book value-scrap value)/life of machine
(76000-4000)/5
14400
(76000-4000)/5
14400
b
Double declining method
straight line depreciation rate
1/5
20%
Double declining rate
20*2
40%
Year
BOOK value
depreciation rate
annual depreciation
book value at year end
2016
76000
40%
30400
45600
2017
45600
40%
18240
27360
c
unit of production method
book value of machine
76000
less scrap value
4000
depreciable value of machine
72000
no of units to be produced
144000
depreciation per unit
72000/144000
0.5
Amount of depreciation in 2016
40000*.5
20000
Amount of depreciation in 2017
42000*.5
21000
d
Year
cost of machine
MACRS rate
Annual depreciation
2016
76000
14.29%
10860.4
2017
76000
24.49%
18612.4
a
purchase price
67000
delivery cost
6000
installation cost
3000
book value of machine
76000
2016
2017
Depreciation using straight line method
(book value-scrap value)/life of machine
(76000-4000)/5
14400
(76000-4000)/5
14400
b
Double declining method
straight line depreciation rate
1/5
20%
Double declining rate
20*2
40%
Year
BOOK value
depreciation rate
annual depreciation
book value at year end
2016
76000
40%
30400
45600
2017
45600
40%
18240
27360
c
unit of production method
book value of machine
76000
less scrap value
4000
depreciable value of machine
72000
no of units to be produced
144000
depreciation per unit
72000/144000
0.5
Amount of depreciation in 2016
40000*.5
20000
Amount of depreciation in 2017
42000*.5
21000
d
Year
cost of machine
MACRS rate
Annual depreciation
2016
76000
14.29%
10860.4
2017
76000
24.49%
18612.4
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