Ask question

Ask question

All categories

2 years ago

13

Adkins Bakery uses the modified half-month convention to calculate depreciation expense in the year an asset is purchased or sol

d. Adkins has a calendar year accounting period and uses the straight-line method to compute depreciation expense. On March 17, 2018, Adkins acquired equipment at a cost of $220,000. The equipment has a residual value of $43,000 and an estimated useful life of 4 years. What amount of depreciation expense will be recorded for the year ending December 31, 2018

1 answer:

Dmitry_Shevchenko [17]2 years ago

4 0

Answer:

Depreciation expense= $36,875

Explanation:

Under the straight line method of depreciation, the cost of an asset less the salvage value is spread equally over the expected useful life.

<em>An equal amount is charged as annual depreciation over the life of the asset. The annual depreciation is calculated as follows:</em>

Annual depreciation:

= (cost of assets - salvage value)/ Estimated useful life

Cost - 220,000

Residual value = 43,000

Estimated useful life = 4 years

Annual depreciation = (220,000- 43,000)/4 =44,250

Annual depreciation = 44,250.

<em>Under the half-month convention, a full month depreciation is charged where an asset is first put to at the middle month of the month. </em>

<em>Thus March 17, 2018 to December 2018 is taken to be 10 full months</em>

Depreciation expense = 44,250.× 10/12 = 36,875

Depreciation expense= $36,875

You might be interested in

Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The a

hjlf

Answer:

<u>Income statement for the company under variable costing</u>

Sales (80,000 units x $45) $3,600,000

Less Cost of Sales

Beginning inventory $0

Cost of goods manufactured (100,000 units x $19) $1,900,000

Cost of good available for sale $1,900,000

Less Ending inventory (20,000 x $19) ($380,000) ($1,520,000)

Contribution $2,080,000

Less Period Costs

Fixed Manufacturing Overhead ($600,000)

Selling and administrative expenses - Fixed ($400,000)

Selling and administrative expenses - Variable ($180,000)

Net Income / (loss) $900,000

Explanation:

Under Variable Costing.

1.Product cost = Variable Manufacturing Costs Only

Therefore, Product cost = $4 + $11 + $ 4

= $19

2.Period Cost = Fixed Manufacturing Overheads + Non - Manufacturing Costs

5 0

2 years ago

A country is in the midst of a recession with real GDP estimated to be $4.5 billion below potential GDP. The government's policy

VARVARA [1.3K]

Answer:

a. The government needs to increase spending by $0.45 billion and decrease taxes by $0.5 billion.

b. The real GDP will fall short of potential GDP by $3.6 billion.

c. The real GDP will fall short of potential GDP by $4 billion.

d. If government overestimates MPC change in spending or taxes will be too small.

Explanation:

The GDP gap is $4.5 billion.

a. The marginal propensity to consume is 0.90.

Government spending multiplier

= $\frac{1}{1-MPC}$

= $\frac{1}{1-0.9}$

= 10

The government needs to increase spending by

= $\frac{GDP\ Gap}{Government\ spending\ multiplier}$

= $\frac{4.5}{10}$

= $0.45 billion

Tax multiplier

= $\frac{-MPC}{1-MPC}$

= $\frac{-0.9}{1-0.9}$

= -9

The government needs to decrease taxes

= $\frac{GDP\ Gap}{Tax\ multiplier}$

= $\frac{4.5}{9}$

= $0.5 billion

b. The marginal propensity to consume is 0.50.

Government spending multiplier

= $\frac{1}{1-MPC}$

= $\frac{1}{1-0.5}$

= 2

If the government increases spending by $0.45 billion,

The real GDP will increase by

= $Increase\ in\ spending\ \times\ Spending\ multiplier$

= $\$ 0.45\ \times\ 2$

= $0.9 billion

The real GDP will fall short of potential GDP by

= $4.5 billion - $0.9 billion

= $3.6 billion

c. Tax multiplier

= $\frac{-MPC}{1-MPC}$

= $\frac{-0.5}{1-0.5}$

= -1

If the government decreases taxes by $0.5 billion

The real GDP will increase by

= $$0.5\ billion\ \times 1$

= $0.5 billion

The real GDP will fall short of potential GDP by

= $4.5 billion - $0.5 billion

= $4 billion

d. If the government overestimates the value of the MPC, then its change in spending or taxes will be too small and real GDP will fall short of potential GDP.

4 0

3 years ago

Social security payments are normally deducted from paychecks. True False

balandron [24]

Answer: False

Explanation:

8 0

3 years ago

Read 2 more answers

you are billed $300 at 5% simple interest for 2 years but given an opportunity to pay only 3% compound interest for 2 years. Whi

balandron [24]

This question is a bit tricky to answer because it does not state how often interest rate is applied so lets say for the simple 5% interest rate the rate of interest was calculated after 2 years you would pay a total interest of $15 since interest was only calculated once but for the 3% calculating every year with compound it would be a total of 18.27 dollars in interest but then you would have to calculate the 5% simple interest the same way which would total to $30 if calculated once a year being more than the 3% compound. But lets say interest is calculated once a month your total for the 5% simple interest would be $360 dollars interest for those 2 years and the 3% compound would be $406.97 dollars in interest. So over all the less amount of times interest compounds the less interest there is making it more worth than the simple but if the compounding occurs more frequently the simple 5% interest is more worth it. In this situation I think it might just be yearly interest which makes the 3% compound more worth taking for this short amount of time.

6 0

2 years ago

Which situation creates scarcity in an economy?

scZoUnD [109]

Answer:

C. Citizens have more wants than they can fulfill with their available resources.

Explanation:

Correct for APEX

4 0

3 years ago