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Exam 18: Depreciation

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Question 21

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Miracle Manufacturing ​ Miracle Manufacturing uses the units-of-production method of depreciation. A piece of heavy equipment costing $112,500 produces an estimated 2,088,000 units in its life and has an estimated scrap value of $8,100. It produced 288,000 units in the first year. -Refer to Miracle Manufacturing. Compute the depreciation for the first year.​

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Question 22

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Accounting Firm ​ An accounting firm using the sum-of-the-years-digits method of depreciation purchased office furniture costing $9,000 and put it into use on April 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $600. -Refer to the Accounting Firm scenario. Compute the depreciation expense for April 1 through December 31 of the first tax year and all 12 months of the second year.

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Question 23

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Northgate Coal Mining ​ Northgate Coal Mining uses the units of production method of depreciation. A piece of heavy equipment costing $368,000 produces an estimated 1,740,000 units in its life and has an estimated scrap value of $20,000. It produced 316,000 units in the first year.​ -Refer to Northgate Coal Mining. Compute the book value at the end of the first year.​

The bookkeeper for the Martel Company is computing depreciation for income tax purposes, using the figures from the MACRS tables supplied by the IRS. The equipment being depreciated had a cost of $16,000 and falls under the class of equipment to be depreciated at a rate of 25% for the first year and 21.43% for the second year. The equipment was purchased and put into use during the first quarter. Compute the amount of depreciation expense for the first year.

XOSCCO Steel Company ​ XOSCCO Steel Company uses the straight-line method of depreciation. A new equipment costing $350,000 has an estimated life of ten years and an estimated scrap value of $6,500. -Refer to XOSCCO Steel Company. Compute the book value of the equipment at the end of the fifth year.

Medical Office ​ A medical office using the double-declining-balance method of depreciation purchased office furniture costing $36,000 and put it in use on May 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $2,400. -Refer to the Medical Office scenario. Compute the book value at the end of the third year.​

Zenix Electronic ​ Zenix Electronic uses the double-declining-balance method of depreciation. An oscilloscope costing $28,500 has an estimated life of five years and an estimated scrap value of $2,500. -Refer to Zenix Electronic. Compute the amount of depreciation taken in the second year. ​

Dental Office ​ A dental office using the straight-line method of depreciation purchased equipment costing $72,000 and put it into use on June 1. The equipment is expected to have a useful life of ten years and an estimated resale value of $4,800. -Refer to the Dental Office scenario. Compute the book value at end of the third year.​

The California Crane Company purchased eight new cranes of different sizes and qualities. CCC uses the double-declining balance method of calculating depreciation. The data for each crane is given below. From this data, compute the first year depreciation for each crane and the value of each crane at the end of its first year of use.​ ​

XOSCCO Steel Company ​ XOSCCO Steel Company uses the straight-line method of depreciation. A new equipment costing $350,000 has an estimated life of ten years and an estimated scrap value of $6,500. -Refer to XOSCCO Steel Company. Compute the annual depreciation amount.

Brook Stone and Paving ​ Brook Stone and Paving purchased a new truck for $68,500. The truck has an estimated life of four years and an estimated scrap value of $4,500.The company uses the double-declining-balance method of depreciation. -Refer to Brook Stone and Paving. Compute the book value at the end of the third year.

Real Estate Office ​ A real estate office using the double-declining-balance method of depreciation purchased office furniture costing $9,000 and put it into use on April 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $600. -Refer to the Real Estate Office scenario. Compute the depreciation expense for April 1 through December 31 of the first tax year and all 12 months of the second and third years.

Northgate Coal Mining ​ Northgate Coal Mining uses the units of production method of depreciation. A piece of heavy equipment costing $368,000 produces an estimated 1,740,000 units in its life and has an estimated scrap value of $20,000. It produced 316,000 units in the first year.​ -Refer to Northgate Coal Mining. Compute the depreciation for the first year.

​Publisher ​ A publisher using the sum-of-the-years-digits method of depreciation purchased office furniture costing $36,000 and put it into use on May 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $2,400. -Refer to the Publisher scenario. Compute the depreciation expense for May 1 through December 31 of the first year and all 12 months of the second year. (Round depreciation for each year to the nearest dollar.)

Lewiswhite Farms Lewiswhite Farms uses the sum-of-the-years-digits method of depreciation. A farm tractor costing $40,000 has an estimated life of ten years and an estimated scrap value of $1,000. ​ -Refer to Lewiswhite Farms. Compute the amount of depreciation taken in the sixth year.

Young Manufacturing ​ Young Manufacturing uses the sum-of-the-years-digits method of depreciation. A piece of heavy equipment costing $37,500 has an estimated life of five years and an estimated scrap value of $2,700. -Refer to Young Manufacturing. Compute the amount of depreciation taken in the third year.

Rolex Watch Company ​ Rolex Watch Company uses the straight-line method of depreciation. A new lathe costing $222,500 has an estimated life of five years and an estimated scrap value of $8,500. ​ -Refer to Rolex Watch Company. Compute the annual depreciation amount.​

Legal Office ​ A legal office using the straight-line method of depreciation purchased office furniture costing $36,000 and put it into use May 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $2,400. ​ -Refer to the Legal Office scenario. Compute the book value at the end of the third year.​

Voice Genesis, Inc. ​ Voice Genesis, Inc. uses the units-of-production method of depreciation. Electronic equipment costing $82,300 has 60,000 estimated hours of operation and an estimated scrap value of $2,500. It operated 20,000 hours in the first year. -Refer to Voice Genesis, Inc. Compute the book value at the end of the first year.​

Reilly Construction Company ​ The bookkeeper for the Reilly Construction Company is computing depreciation for income tax purposes, using the figures from the MACRS tables supplied by the IRS. Reilly Construction Company purchased a truck in February 2005 for $40,000. In March 2005, a second truck was purchased for $48,000. Assume that allowable depreciation for each truck is 20% for the first year and 32% for the second year. -Refer to Reilly Construction Company. Compute the total allowable cost recovery on the two trucks for the year 2005.​