Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Textbook Question
Chapter 11, Problem 3E
Required:
- 1. Next Level Which depreciation method is the company using for each asset?
- 2. Compute the depreciation expense for 2021 and 2022 for each asset.
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The Nickle Company purchased an asset for P17,000 on January 2, 2021. The asset has
an expected residual value P1,000. The depreciation expense for 2021 and 2022 is shown
next for three alternative depreciation methods:
Year Method A Method B Method C
2021 P4,000 P6,400 P6,375
2022 4,000 4,800 3,984
Required
Which depreciation method is the company using in each example?
Compute the depreciation expense for 2023 and 2024 under each method
Depreciation Methods Gruman Company purchased a machine for
$220,000 on January 2, 2019.It made the following estimates:
In 2019,Gruman uses the machine for 1,800 hours and produces 44,000 units.In 2020, Gruman uses the machine for 1,500 hours and produces 35,000 units.
Required:
Compute the depreciation expense for 2019 and 2020 under each of the following methods:
straight-line
sum-of-the-years'-digits (round to the nearest dollar)
c.double-declining-balance
activity method based on hours worked
activity method based on units of output
For each method,what is the book value of the machine at the end of 2019? At the end of 2020?
.-t Level If Gruman used a service life of 8 years or 15,000 hours and a residual value of $10,000,what would be the effect on (a) depreciation expense and (b) book value under the straight-line, sum-of-the-years'- digits, and double-declining balance depreciation methods?
Bitter Company acquired a machinery on April 1, 2019.
Cost 1,200,000
Residual value 120,000
Estimated Useful life 8 years
Requirements:
What is the depreciation for 2019 using sum of years’ digits?
What is the depreciation for 2020 using sum of years’ digits?
What is the depreciation for 2019 using double declining balance method?
What is the depreciation for 2020 using double declining balance method?
Chapter 11 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 11 - Briefly explain the meaning of the four factors...Ch. 11 - Prob. 2GICh. 11 - Would it be desirable to require all companies to...Ch. 11 - What is the depredation base?Ch. 11 - Prob. 5GICh. 11 - A company should use an accelerated depreciation...Ch. 11 - Prob. 7GICh. 11 - Prob. 8GICh. 11 - Prob. 9GICh. 11 - Prob. 10GI
Ch. 11 - Under U.S. GAAP, in a year in which the fair value...Ch. 11 - Prob. 12GICh. 11 - Prob. 13GICh. 11 - Compare the group and composite methods of...Ch. 11 - Prob. 15GICh. 11 - Describe the accounting for changes and...Ch. 11 - Prob. 17GICh. 11 - Prob. 18GICh. 11 - Explain the meaning of an impaired asset and...Ch. 11 - Prob. 20GICh. 11 - Prob. 21GICh. 11 - Prob. 22GICh. 11 - (Appendix 11.1) Why might depreciation on a...Ch. 11 - A method that excludes residual value from the...Ch. 11 - Vorst depreciates Asset A on the...Ch. 11 - Using the sum-of-the-years-digits method, how much...Ch. 11 - Vorst depreciates Asset C by the straight-line...Ch. 11 - A machine with a 4-year estimated useful life and...Ch. 11 - At the end of the expected useful life of a...Ch. 11 - The composite depreciation method: a. is applied...Ch. 11 - On July 1, 2018, Mundo Corporation purchased...Ch. 11 - A fixed asset with a 5-year estimated useful life...Ch. 11 - Crowder Company acquired a tract of land...Ch. 11 - Susquehanna Company purchased an asset at the...Ch. 11 - Akron Incorporated purchased an asset at the...Ch. 11 - Albany Corporation purchased equipment at the...Ch. 11 - Utica Machinery Company purchases an asset for...Ch. 11 - In Year 1, Utica Machinery Company uses the asset...Ch. 11 - At the beginning of Year 1, Herkimer Co....Ch. 11 - At the end of Year 1, Herkimer Co. sells two...Ch. 11 - Buffalo, Inc., uses composite depreciation for its...Ch. 11 - Prob. 9RECh. 11 - Assume the same information as in RE11-3, except...Ch. 11 - Oneonta Co. owns equipment with a cost of 300,000...Ch. 11 - At the beginning of the current year, Andy Company...Ch. 11 - Prob. 13RECh. 11 - (Appendix 11.1) Auburn Company purchased an asset...Ch. 11 - Depreciation Methods Gruman Company purchased a...Ch. 11 - Depreciation Methods Sorter Company purchased...Ch. 11 - Depreciation Methods Nickle Company purchased...Ch. 11 - Determination of Acquisition Cost On January 1,...Ch. 11 - Comprehensive: Acquisition, Subsequent...Ch. 11 - Prob. 6ECh. 11 - Loban Company purchased four cars for 9,000 each...Ch. 11 - Wilcox Company acquires four machines that have...Ch. 11 - Lightning Delivery Company purchased a new...Ch. 11 - Hathaway Company purchased a copying machine for...Ch. 11 - On May 10, 2019, Horan Company purchased equipment...Ch. 11 - Reveille, Inc., purchased Machine #204 on April 1,...Ch. 11 - Bailand Company purchased a building for 210,000...Ch. 11 - On January 1, 2019, Barbosa Company purchased a...Ch. 11 - On January 1, 2015, Vallahara Company purchased...Ch. 11 - Swann Company sold a delivery truck on April 1,...Ch. 11 - On July 1, 2019, Osceola Company retired a metal...Ch. 11 - Prob. 18ECh. 11 - Prob. 19ECh. 11 - (Appendix 11.1) Depreciation for Financial...Ch. 11 - Depreciation Methods Winsey Company purchased...Ch. 11 - Depreciation Methods Lord Company purchased a...Ch. 11 - Depreciation Methods Sayers Company purchased a...Ch. 11 - Cost of Asset and Depreciation Method Heist...Ch. 11 - Group and Composite Depreciation Chcadle Company...Ch. 11 - Borrell Company purchased four delivery trucks on...Ch. 11 - Dinnell Company owns the following assets: In the...Ch. 11 - Kam Company purchased a machine on January 2,...Ch. 11 - During 2019, Ryel Companys controller asked you to...Ch. 11 - Petes Petroleum, Inc., an SEC registrant with a...Ch. 11 - On January 1, 2014, Borstad Company purchased...Ch. 11 - Prob. 12PCh. 11 - Prob. 13PCh. 11 - Hunter Company purchased a light truck on January...Ch. 11 - Logan Corporation, a manufacturer of steel...Ch. 11 - On January 2, 2019, Brock Corporation purchased a...Ch. 11 - On December 31, 2019, Vail Company owned the...Ch. 11 - Soon after December 31, 2019, the auditor...Ch. 11 - Prob. 19PCh. 11 - Pell Corporations Property, Plant, and Equipment...Ch. 11 - Prob. 21PCh. 11 - Prob. 1CCh. 11 - Prob. 2CCh. 11 - Straight-Line and Composite Depreciation Portland...Ch. 11 - Depreciation continues to be one of the most...Ch. 11 - The following two statements concern depreciation:...Ch. 11 - Prob. 6C
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- Depreciation Methods Sorter Company purchased equipment for 200,000 on January 2, 2019. The equipment has an estimated service life of 8 years and an estimated residual value of 20,000. Required: Compute the depreciation expense for 2019 under each of the following methods: 1. straight-line 2. sum-of-the-years-digits 3. double-declining-balance 4. Next Level What effect does the depreciation of the equipment have on the analysis of rate of return?arrow_forwardCost of Asset and Depreciation Method Heist Company purchased a machine on January 2, 2019, and uses the 150%-declining-balance depreciation method. The machine has an expected life of 10 years and an expected residual value of 5,000. The following costs relate to the acquisition and use of the machine during the first year of its operations: Required: 1. Compute the depreciation expense for 2019 and 2020. 2. Next Level What is the effect on the financial statements if the company used the straight-line method instead of the 150%-declining-balance method?arrow_forwardOn May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.arrow_forward
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