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Weezer Company purchased equipment for $700,000 cash on January 1,2009. The estimated life is 10 years or 2,000,000 units; salvagevalue is estimated at $70,000.

a.What is the double-declining balance rate?

b.Complete the following table.

Year ended Depreciation Expense Accumulated Depreciation Net BookValue

12/31/2009 [ ] [ ] [ ]

12/31/2010 [ ] [ ] [ ]



c.What will be the book value of the equipment at the end of itsuseful life?

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Jarrod Robel
Jarrod RobelLv2
28 Sep 2019

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Hi-Crest Company purchased a machine on January 1, 2009, for $400,000. The machine has an estimated useful life of 6 years and a $10,000 residual value. It is now December 31, 2010 and Hi-Crest Company is in the process of preparing financial statements. Calculate depreciation expense for 2009 and 2010, using both the straight-line and double declining balance methods of depreciation. Show work.

Use the following information for the next 5 questions:

On January 1, 2008, KA Company purchased equipment for$105,000. The estimated useful life of the equipment is10 years, during which time it will be produce 100,000units. Estimated residual value is$5,000. KA’s fiscal year is January 1 to December31.

If KA Company uses the straight-line methodof depreciation, thenet book valueof the asset at the end of the secondyear willbe:

If KA Company uses the units methodof depreciation and produced30,000 units in the first year, the depreciation expensefor thefirstyear will be:

If KA Company uses the double-declining-balance methodofdepreciation, the balance in accumulated depreciationat the end ofthe second year will be:

4.If he company should recognizea:

a. $70,000 loss on the sale

b. $35,000 gain on the sale

c. $10,000 gain on the sale

d. $10,000 loss on the sale

e.None of the above.

Assume KA Company purchased the equipment on July 1, 2008. Whatis the net book valueof the equipment on December 31, 2010, afteradjusting entries, if KA Company uses the straight-line methodofdepreciation?

ABC Company purchased equipment on January 1, 2014. Availableinformation regarding this equipment and its acquisition are:

Cost: $800,000

Estimated useful life: 8 years

Estimated service hours: 40,000

Residual value: $60,000

The equipment was operated for a total of 5,000 hours in 2014and 7,000 hours in 2015. It is company policy to take a full year’sdepreciation on all assets depreciated by time-based method in theyear of acquisition.

( 1). Calculate the depreciation expense that will be recordedat the 12/31 fiscal year end for 2014 and 2015 under followingmethods: SHOW ALL WORK! (round amounts to nearest dollar asnecessary)

(a) straight-line

(b) double-declining balance

(c) sum-of-the-years’-digits

(d) service hours (round rate to the nearest cent asnecessary)

(2). Show calculations or T account to support your answers.Calculate the following amounts linked to this asset, assumingstraight-line depreciation:

(a) depreciation base

(b) book value of the equipment to be reported on the 12/31/15balance sheet

(c) total depreciation that was taken on the equipment as of theend of its useful life, i.e. the balance in the accumulateddepreciation account at the end of the asset’s useful life

(d) book value of the equipment at the end of its usefullife

(e) the amount by which total depreciation at the end of theuseful life of the equipment would be different under thestraight-line method vs. double-declining balance method

(f) identify which of the depreciation methods listed above areaccelerated methods

(g) record the adjusting entry for depreciation at 12/31/15assuming the company uses the double declining balance method ofdepreciation.

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