In recent years, Wang Company purchased three machines. Because of heavy turnove
ID: 2585014 • Letter: I
Question
In recent years, Wang Company purchased three machines. Because of heavy turnover in the accounting department, a different accountant was in charge of selecting the deprediation method for each machine, and each selected a different method. Information concerning the machines is summarized below. Acquired Cost Value in Years Method ¥105,000 ¥5,000 10,000 15,000 Straight-line Decdlining-balance 10 150,000 100,000 For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 25,000. Actual hours of use in the first years were: 2017, 1,300; 2018, 4,100; and 2019, 5,500 Calculate depreciable cost per hour for Machine 3. (Round answer to 2 decimal places, e.g. 0.50.) Depreciable cost per hourExplanation / Answer
Rate of depeciation = (100/10)*2 = 20%
Year
Deprciation is calculated in the table on the right.
beginning
2015
150000
2016
120000
2017
Depreciation is calculated in the table to the right.
Year
hours used
2017
1300
2018
4100
2019
b)
IF MACHINE 2 HAD BEEN PURCHASED ON MAY 1.
Rate of depeciation = (100/10)*2 = 20%
Year
For 2015 it will be 20%*8/12 = 13.33%
beginning
The depreciation schedule is given to the right.
2015
150000
2016
130005
2017
WANG COMPANY: Depreciable cost per hour = (100000-15000)/25000 = $ 3.40 per hour Answer a) MACHINE 1: STRAIGHT LINE METHOD: Annual depreciation = (105000-5000)/8 = $ 12,500 Accumulated depreciation as on December 31, 2017 = 12500*4 = $ 50,000 Answer MACHINE 2: DDB METHOD:Rate of depeciation = (100/10)*2 = 20%
Year
Book value Depreciation Depreciation Accumulated Book valueDeprciation is calculated in the table on the right.
beginning
rate for the year Depreciation ending Accumulated depreciation as on December 31, 2017 = $88,5602015
150000
20.00% 30000 30000 1200002016
120000
20.00% 24000 54000 960002017
96000 20.00% 19200 73200 76800 MACHINE 3: UNITS OF ACTIVITY METHOD:Depreciation is calculated in the table to the right.
Year
Machine Depreciation Depreciation Accumulated Book value Accumulated depn as on December 31, 2017 = $4,420.hours used
rate ($/MHr) for the year Depreciation ending2017
1300
3.40 4420 4420 955802018
4100
3.40 13940 18360 816402019
5500 3.40 18700 37060 62940b)
IF MACHINE 2 HAD BEEN PURCHASED ON MAY 1.
Rate of depeciation = (100/10)*2 = 20%
Year
Book value Depreciation Depreciation Accumulated Book valueFor 2015 it will be 20%*8/12 = 13.33%
beginning
rate for the year Depreciation endingThe depreciation schedule is given to the right.
2015
150000
13.33% 19995 19995 130005 Accumulated depreciation as on December 31, 2017 = $66,797.2016
130005
20.00% 26001 45996 1040042017
104004 20.00% 20801 66797 83203Related Questions
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