Cutter Enterprises purchased equipment for $81,000 on January 1, 2024. The equipment is expected to have a five-year life and a residual value of $7,200. Using the sum-of-the-years'-digits method, depreciation for 2025 and book value on December 31, 2025, would be: Note: Do not round the depreciation rate per year. Multiple Choice $19,680 and $36,720, respectively. $21,600 and $25,200, respectively. $21,600 and $32,400, respectively. $19.680 and $29520 espectively

Cutter Enterprises purchased equipment for $81,000 on January 1, 2024. The equipment is expected to have a five-year life and a residual value of $7,200. Using the sum-of-the-years'-digits method, depreciation for 2025 and book value on December 31, 2025, would be: Note: Do not round the depreciation rate per year. Multiple Choice $19,680 and $36,720, respectively. $21,600 and $25,200, respectively. $21,600 and $32,400, respectively. $19.680 and $29520 espectively

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 2E: Depreciation Methods Sorter Company purchased equipment for 200,000 on January 2, 2019. The...

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Hathaway Company purchased a copying machine for 8,700 on October 1, 2019. The machines residual value was 500 and its expected service life was 5 years. Hathaway computes depreciation expense to the nearest whole month. Required: 1. Compute depredation expense (rounded to the nearest dollar) for 2019 and 2020 using the: a. straight-line method b. sum-of-the-years-digits method c. double-declining-balance method 2. Next Level Which method produces the highest book value at the end of 2020? 3. Next Level Which method produces the highest charge to income in 2020? 4. Next Level Over the life of the asset, which method produces the greatest amount of depreciation expense?
Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation is recorded?
Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.
Depreciation Methods Sorter Company purchased equipment for 200,000 on January 2, 2019. The equipment has an estimated service life of 8 years and an estimated residual value of 20,000. Required: Compute the depreciation expense for 2019 under each of the following methods: 1. straight-line 2. sum-of-the-years-digits 3. double-declining-balance 4. Next Level What effect does the depreciation of the equipment have on the analysis of rate of return?
Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated life: 5 years Estimated residual value: 3,000 Depreciation method for financial statements: straight-line method Depreciation for income tax purposes: MACRS (3-year life) From 2019 through 2023, each year, Hunter had sales of 100,000, cost of goods sold of 60,000, and operating expenses (excluding depreciation) of 15,000. The truck was disposed of on December 31, 2023, for 2,000. Required: 1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2019 through 2023. 2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2019 through 2023. 3. Compare the total income for all 5 years under Requirements 1 and 2.
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Cutter Enterprises purchased equipment for $51,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $6,300.Using the sum-of-the-years'-digits method, depreciation for 2022 and book value at December 31, 2022, would be: (Do not round depreciation rate per year) Multiple Choice $13,600 and $20,400 respectively. $11,920 and $24,180 respectively. $11,920 and $17,880 respectively. $13,600 and $14,100 respectively.
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