Question

The following independent situations describe facts concerningthe ownership of various assets.

(a) Dickenton Company purchased a tooling machine in 2000 for$85,000 . The machine was being depreciated on the straight-linemethod over an estimated useful life of 30 years with no salvagevalue. At the beginning of 2015, when the machine had been in usefor 15 years, Dickenton paid $17,000 to overhaul the machine. As aresult of this improvement, Dickenton estimated that the usefullife of the machine would be extended an additional five years.•

(b) Andresen Manufacturing Co., a calendar-year company,purchased a machine for $50,000 on January 1, 2013. At the date ofpurchase, Andresen incurred the following additional costs:

Loss on sale of old machinery ………………………………..$3,000

Freight Cost …………………………………………………….$900

Installation Cost ………………………………………………..$1,900

Testing costs prior to regular operation ……………….…….$800

The estimated salvage value of the machine was $8,000, andAndresen estimated that the machine would have a useful life of 15years, with depreciation being computed using the straight-linemethod. In January 2015, accessories costing $2,925were added tothe machine to reduce its operating costs. These accessoriesneither prolonged the machine’s life nor did they provide anyadditional salvage value.

(c) On July 1, 2015, Schiff Corporation purchased equipment at acost of $48,000. The equipment has an estimated salvage value of$6,000 and is being depreciated over an estimated life of fiveyears under the double-declining-balance method of depreciation.For the six months ended December 31, 2015, Schiff recorded ahalf-year’s depreciation.

(d) Quinn Company acquired a tract of land containing anextractable natural resource. Geological surveys estimate that therecoverable reserves will be 4,000,000 tons and that the land willhave a value of $800,000 after restoration. Relevant costinformation follows:

Land………………………………………………………………$14,00,000

Tons mined and sold in 2015 ………………………………….$950,000

(e) In January 2015, Bradley Corporation entered into a contractto acquire a new machine for its factory. The machine, which had acash price of $150,000, was paid for as follows:

Down Payment ……………………………………………………………….…$40,00

400 shares of Bradley common stock with an agree upon value of$325………$130,000

Prior to the machine’s use, installation costs of $10,000 wereincurred. The machine has an estimated useful life of 16 years andan estimated salvage value of $20,000 . The straight-line method ofdepreciation is used.

*** Instructions: In each case, compute the amount ofdepreciation or depletion for 2015.

Check figure (b) Depreciation expense for year 2015 = $3,265