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Norma-Jean [14]
3 years ago
12

Speedy Delivery Company purchases a delivery van for $43,200. Speedy estimates that at the end of its four-year service life, th

e van will be worth $6,800. During the four-year period, the company expects to drive the van 227,500 miles.Actual miles driven each year were 58,000 miles in year 1 and 62,000 miles in year 2.Required:Calculate annual depreciation for the first two years of the van using each of the following methods. (Do not round your intermediate calculations.)1. Straight-line.Year: Annual Depreciation122. Double-declining-balance.Year: Annual Depreciation12 3. Activity-based.Year: Annual Depreciation12
Business
1 answer:
Nuetrik [128]3 years ago
8 0

Answer:

1. Depreciation for year 1 on straight line method    $ 9,100

  Depreciation for year 2 on straight line method    $ 9,100

2. Depreciation for year 1 on double declining method    $ 20,200

  Depreciation for year 2 on double declining method     $ 11,,500

3. Depreciation for year 1 on activity based method    $ 9,280

  Depreciation for year 2 on activity based method    $ 9,920

Explanation:

Straight Life Depreciation

Cost of delivery van                            $ 43,200

Salvage Value at end of life              ($   6,800)

Depreciable value                              $ 36,400

Straight Line Depreciation  per year is calculated by dividing the depreciable value by the useful life:

$ 36.400/4  = $ 9,100. Since it is equal amounts over the useful life of the asset,the depreciation amount is same for year 1 and year 2

Double declining balance Depreciation

In a double declining balance method of depreciation, the depreciation rate in the first year is double percentage of Straight line  method, this does not consider salvage value. The percentage rate shall therefore be 100/4 *2 = 50 %    

Cost of delivery van                                                               $ 43,200

Straight Line depreciation based on 4 years life                 $ 10,100

Double the Straight Line method in first year          

so depreciation in year 1 is $ 10,100 * 2                                 $ 20,200

The depreciation base for year 2  shall be

Cost of delivery van                                                                 $ 43,200                                                                            

Depreciation for year 1                                                            $ 20,200

Depreciable base for year 2                                                   $ 23,000

Depreciation for year 2 @ 50 %                                              $ 11,500

Activity based Depreciation

Cost of delivery van                            $ 43,200

Salvage Value at end of life              ($   6,800)

Depreciable value                              $ 36,400

Expected usage 227,500 miles

Depreciation per mile is  227,500 miles / Depreciable Value $ 36,400  $ 0.16 per mile

Depreciation for year 1 on 58,000 miles is 58,000 * 0.16 = $ 9,280

Depreciation for year 2 on 62,000 miles is 62,000 * 0.16 = $ 9,920

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Martinez Corporation commenced operations in early 2020. The corporation incurred $48,500 of costs such as fees to underwriters,
igomit [66]

Answer:

See below.

Explanation:

Since the expenses are related to the formation of the business, we first capitalize these expenses and record them in our balance sheet as,

Debit Intangible Assets (Formation) by $48,500

Credit Cash/Bank by $48,500

This records an asset for the year of operation.

We amortize or depreciate these type of capitalized costs over a defined period of time. Assuming that we write off the entire cost by the end of first year we will record amortization as,

Debit Amortization expense/Income statement by $48,500

Credit Intangible Assets (Formation) by $48,500

Hope that helps.

7 0
3 years ago
The management of Firebolt Industries Inc. manufactures gasolineand diesel engines through two production departments, Fabricati
GalinKa [24]

Solution:

Single factory overhead amount: the amount at which plant overheads or processing overheads are assigned to goods is referred to as single plant overhead rate.

Formula to measure a single plant-wide overhead rate:

Single plant-wide overhead rate :

\frac{Total budgeted factory overhead}{ Total budgeted plant-wide allocation base}  

Different development team overhead rate: this distribution system describes the various divisions engaged in the manufacturing cycle. Factory overheads are assigned to goods on the basis of the overhead cost for each of the manufacturing units.

Formula for calculating various output department overhead:

Multiple production department overhead rate:

\frac{ Budgeted department factory overhead}{ Budgeted department factory overhead}

For calculate: single plant-wide overhead rate use direct working hours (DLH) as the allocation basis, and measure factory overhead.

Using DLH as the allocation basis to measure a single plant-wide overhead limit.

Single plant-wide overhead rate :  \frac{Total budgeted factory overhead}{ Total budgeted plant-wide allocation base}

                                                     = \frac{80,000}{10,000 DLH}

For calculate: single plant-wide overhead rate use direct working hours (DLH) as the allocation basis, and measure factory overhead.

Using DLH as the allocation basis to measure a single plant-wide overhead limit.

4 0
3 years ago
Carillo Industries collected $108,000 from customers in 2017. Of the amount collected, $25,000 was for services performed in 201
Elis [28]

Answer and Explanation:

The computation is shown below;

But before reaching to the final answers, first do the following calculations

Cash collected $108000

Add Services performed in 2017(not collected) $36000

less Services performed in 2016(collected in 2017) $25000

Revenue for 2017 $119,000

Cash paid in 2017 $72,000

Add Expense incurred not yet paid for 2017 $42000

Less Expense paid for 2016 -$30000

Expense for 2016 $84000

Now

a. Cash basis  

Revenue $108000

Less Expenses -$72,000

Net income $36000

b. Accrual basis  

Revenue for 2017 $119,000

Less Expenses for 2017 $84,000

Net income $35,000

8 0
3 years ago
Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. The tax would shift a. demand,
Sedbober [7]

Answer:

b. supply, raising the equilibrium price and lowering the equilibrium quantity in the market for artificially sweetened beverages.

Explanation:

In the case when the government impose the tax of 20% on sweetened beverages so here the price should be increased but at the same time the quantity is decreased as the supply curve shifted to the leftward where the demand curve is not impacted at all due to this things the price increased and the demand is decreased

Therefore the option b is correct

4 0
2 years ago
Using+a+50/50+debt/equity+mix,+a+1%+reduction+in+which+cost+of+capital+category+would+drive+a+larger+reduction+in+wacc?
Fantom [35]

A larger reduction in wacc equals impact from equity and debt. The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the IRR

WACC SG&A Sales CAGR EPS To make projections while capital budgeting in Excel, you have to make assumptions Although conservative assumptions are safe, they are generally so safe you would not want to make the investment.

It is best for organizations to keep their debt-to-equity ratio at a manageable level, which is generally indicated by a ratio that is below Sustaining a very low ratio would show companies that they may not be taking advantage of the cash they have for investment opportunities the project will break even.

Learn more about Equity here:-brainly.com/question/12781629

#SPJ4

4 0
2 years ago
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