Problem C (33 points) -PROBLEMS- INSTRUCTIONS: Solve each of the following probl
ID: 2586197 • Letter: P
Question
Problem C (33 points) -PROBLEMS- INSTRUCTIONS: Solve each of the following problems and record the answers in the Answers column. For Scorin Answers If the cost of a fixed asset is $50,000 and its accumulated depreciation is $35,000, its book value is 0. $15,000 1-3. Equipment costing $250,000 is sold for $60,000. 1. If the accumulated depreciation was $150,000, the amount of gain or loss (G or L) is. 2. If the accumulated depreciation was $200,000, the amount of gain or loss (G or L)is If the accumulated depreciation was $250,000, the amount of gain or loss (G or L) is. A patent with a cost of $200,000 has an estimated useful life of 10 years and a legal life of 20 years. The annual amortization is........... Machinery acquired on the first day of the current fiscal year for $550,000 has an estimated useful life of 5 years or 50,000 hours and 3. 3, 4. 4. 5-7. a residual value of $0. Determine the depreciation for the current year by each of the following methods: 6. 6. Double-declining-balance. 7. Units-of-production (the equipment was used for 5,000 hours during 7. the year)... Based on the data in Question 5-7, and assuming that the machinery was used for 10,000 hours in the second year, determine the depreciation for the second year by each of the following methods: 8-9. 8 8. Double-declining-balance. 9. Units-of-production. 10-11. Based on the data in Question 5-7, and assuming that the machinery was used for 5,500 hours in the third year, determine the depreciation for the third year by each of the following methods: 10. 10. Double-declining-balance 11. Units-of-productionExplanation / Answer
Solution:
1-3
1) Answer is $40,000
Equipment Costing $250,000
Sale Value = $60,000
Accumulated Depreciation = $150,000
Book Value of Equipment = Equipment Cost 250,000 – Accumulated Depreciation 150,000 = $100,000
Book Value is higher than Sale Value, hence there is a loss.
Loss Amount = $100,000- 60,000 = $40,000
2) Answer is $10,000
Sale Value = $60,000
Accumulated Depreciation = $200,000
Book Value of Equipment = Equipment Cost 250,000 – Accumulated Depreciation 200,000 = $50,000
Book Value is lower than Sale Value, hence there is a Gain.
Gain Amount = $60,000 – 50,000 = $10,000
3) Answer is $60,000
Book Value of Equipment = Equipment Cost 250,000 – Accumulated Depreciation 250,000 = $0
Book Value is lower than Sale Value, hence there is a Gain.
Gain Amount = Sale Value = $60,000
4) Answer is $20,000
Annual Amortization = Value of Patent / Useful Life = 200,000 / 10 = $20,000
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