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kobusy [5.1K]
3 years ago
9

Depreciation calculation methods—partial year Freedom Co. purchased a new machine on July 2, 2013, at a total installed cost of

$44,000. The machine has an estimated life of five years and an estimated salvage value of $6,000.
a. Calculate the depreciation expense for each year of the asset’s life using:
1. Straight-line depreciation.
2. Double-declining-balance depreciation.
3. 150% declining-balance depreciation.

b. How much depreciation expense should be recorded by Freedom Co. for its fiscal year ended December 31, 2013, under each of the three methods? (Note: The machine will have been used for one-half of its first year of life.)
c. Calculate the accumulated depreciation and net book value of the machine at December 31, 2014, under each of the three methods.
Business
1 answer:
Igoryamba3 years ago
5 0

Answer:

a.

1. $7,600

2. $17,600

3. $13,200

b.

1. $3,800

2. $8,800

3. $6,600

c.

1. $15200

2. $35,200

3. $26,400

Explanation:

1. Straight Line Depreciation Method

$44,000 - $6,000 / 5 years

= $7,600.

2. Double declining- balance Method

100% / 5 years = 20%

20% * 2 = 40%

$44,000 * 40% = $17,600

3. 150% declining- balance Method

150% / 5 years = 30%

$44,000 * 30% = $13,200

b. Because this is for 6 months only the depreciation expense calculated will be divided into 2

1. $7,600 / 2 = $3,800

2. $17,600 / 2 = $8,800

3. $13,200 / 2 = $6,600

c.

1. $7,600 * 2 = $15200

2. $17,600 * 2 = $35,200

3. $13,200 * 2 = $26,400

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Explanation:

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3 years ago
Manson Industries incurs unit costs of $8 ($5 variable and $3 fixed) in making an assembly part for its finished product. A supp
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Answer:

Manson will incur a loss of $10,300 by buying the part.

Explanation:

Purchases = 10,300 * $6 = $61,800

Variable cost = 10,300 * $5 = $51,500

Fixed cost = 10,300 * $3 = $30,900

Analysis:

<u>Details               Make ($)           Buy ($)         Net ($) </u>

Purchase                  0                  61,800          61,800

Variable              51,500                   0              51,500

Fixed                  30,900              30,900        <u>     0    </u>

Loss                                                                  <u> 10,300   </u>

Therefore, Manson will incur a loss of $10,300 by buying the part.

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When activity-based costing is used to apply overhead to products, support department costs are referred to as Group of answer c
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Use the following information to answer questions 4a.1-4a.5 Gerrell Corp. is comparing two different capital structures. Plan I
maxonik [38]

Answer:

Gerrel Corp.

EPS (Earnings per share) = Earnings after Tax/Number of outstanding shares

Plan I:

EBIT =                    $90,000

Interest =                 $4,750 ($95,000 x 5%)

Pre-Tax Income = $85,250

Income Tax Exp.      34,100 ($85,250 x 40%)

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Plan II:

EBIT =                    $90,000

Interest =                 $9,500 ($190,000 x 5%)

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Plan II = 14,000 shares + $190,000 debt

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Plan II: (Equity and Debt)

Shares of 14,000 x $23.75 + $190,000 debt = $522,500 in total capital

Plan III: (All-equity plan):

Shares of 22,000 x $23.75 = $522,500 in total capital

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