1 Name: 3 Section time: 10 11:30 5 Homework-chapter 11 7 1.On September 1,2016,

Question

1 Name: 3 Section time: 10 11:30 5 Homework-chapter 11 7 1.On September 1,2016, the Alpha Company purchased equipment for $115,000. 8 The estimated life of the equipment is 10 years with a $5,000 residual value. 9 Over it's life, the equipment will produce 440,000 units 10 11 Calculate the first two years of depreciation using the following methods: 12 Straight line 13 14 Sum of the years digits 15 16 17 double declining balance 18 19 20 Units of production: 20,000 units were produced in 2016; 61,000 units were 21 produced in 2017. 23 24 25 26 27 28 29 |2. Beta Corp bought equipment in 1/1/14 for $40,000. The equipment 30 was depreciated over 5 years using straight line method with a residual value 31 of $4,000. On January 1, 2016 it was determined that the lifie of the equipment 32 should have been 10 years with a residual value of $1800 34 Using straight line, what is depreciation in 2016. 35 36 37 38 Assume instead that the corporation switches to sum of the years 39 digits in 2016. The new life Is still 10 years with an $1800 residual value. 40 what is depreciation in 2016? 41

Explanation / Answer

As per chegg's policy, I am allowed to answer only the first 4 parts of a question so please don't mind and ask other questions separately.

A) Straight line:

Year 1 = Year 2 = (115000-5000)/10 = 11000

B) Sum of the year digits:

Year 1: (115000-5000)*10/(1+2+3+4++++10) = 20000

Year 2: (115000-5000)*9/(1+2+3+4++++10) = 18000

C) Double declining Balance:

Year 1: 115000*2/10 = 23000

Year 2: (115000-23000)*2/10 = 18400

Units of production:

Year 1: (115000-5000)*20000/440000 = 5000

Year 2: (115000-5000)*61000/440000 = 15250

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