A21-8 Change in Estimated Useful Life (LO 21-1, 21-6, 21-8) Stacey Corp. has been depreciating equipment over a 10-year life on a straight-line basis. The equipment, which cost $28,600, was purchased on 1 January 20X1. It has an estimated residual value of $7,600. On the basis of experience since acquisition, management has decided in 20X5 to depreciate it over a total life of 14 years instead of 10 years, with no change in the estimated residual value. The change is to be effective on 1 January 20X5. The 20X5 financial statements are prepared on a comparative basis; 20X4 and 20X5 incomes before depreciation were $54,100 and $56,400, respectively. Disregard income tax considerations. 3. Show how the accounting change, the equipment, and the related depreciation should be reported on the 20X5 financial statements, including comparative 20X4 results. Comparative SFP, 31 December: Equipment Accumulated depreciation Net book value Comparative SCI for year: Earnings prior to depreciation and tax Depreciation expense Earnings before tax 20X5 20X4 $ 0 $ $ 0 $ 0
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- A21-8 Change in Estimated Useful Life (LO 21-1, 21-6, 21-8) Stacey Corp. has been depreciating equipment over a 10-year life on a straight-line basis. The equipment, which cost $28,600, was purchased on 1 January 20X1. It has an estimated residual value of $7,600. On the basis of experience since acquisition, management has decided in 20X5 to depreciate it over a total life of 14 years instead of 10 years, with no change in the estimated residual value. The change is to be effective on 1 January 20X5. The 20X5 financial statements are prepared on a comparative basis; 20X4 and 20X5 incomes before depreciation were $54,100 and $56,400, respectively. Disregard income tax considerations. Required: 1-a. Analyze the effects of the change. (Amounts to be deducted should be indicated by a minus sign.) Analysis: Cost Accumulated depreciation to date Residual value To be depreciated Annual depreciation (SL): Per year S 20X1 0 S 20X5 0A21-8 Change in Estimated Useful Life (LO 21-1, 21-6, 21-8) Stacey Corp. has been depreciating equipment over a 10-year life on a straight-line basis. The equipment, which cost $28,600, was purchased on 1 January 20X1. It has an estimated residual value of $7,600. On the basis of experience since acquisition, management has decided in 20X5 to depreciate it over a total life of 14 years instead of 10 years, with no change in the estimated residual value. The change is to be effective on 1 January 20X5. The 20X5 financial statements are prepared on a comparative basis; 20X4 and 20X5 incomes before depreciation were $54,100 and $56,400, respectively. Disregard income tax considerations. 3. Show how the accounting change, the equipment, and the related depreciation should be reported on the 20X5 financial statements, including comparative 20X4 results. Comparative SFP, 31 December: Equipment Accumulated depreciation Net book value Comparative SCI for year. Earnings prior to depreciation…A10-8 Depreciation Computation:Mace Company acquired equipment that cost $36,000, which will be depreciated on the assumption that the equipment will last six years and have a $2,400 residual value. Component parts are not significant and need not be recognized and depreciated separately. Several possible methods of depreciation are under consideration.Required 1. Prepare a schedule that shows annual depreciation expense for the first two years, assuming the following (show computations and round to the nearest dollar):1. Declining-balance method, using a rate of 30%.2. Productive-output method. Estimated output is a total of 210,000 units, of which 24,000 will be produced the first year; 36,000 in each of the next two years; 30,000 the fourth year; and 42,000 the fifth and sixth years.3. Straight-line method.
- Tick-Tock Corporation purchased equipment on January 1 at a cost of $75,000. The equipment has an estimated residual value of $15,000 and a useful life of five years. Assuming Tick-Tock utilized the straight-line method of depreciation, what is the gain or loss on the sale of equipment on December 31, Year 2, for $65,000? Select one: O a. $5,000 loss on sale O b. s10,000 loss on sale c. $14,000 gain on sale d. $20,000 gain on saleProblem 9-5 (IAA) On January 1, 2016, Milan Company purchased an for P6,000,000. The equipment had been depreciated using the straight line with residual value of P600,000 and useful equipment On January 1, 2018, the entity determined that the remaining useful life is 10 years and the residual value is P800,000. What is the depreciation for 2018? a. 270,000 b. 546,000 c. 466,000 d. 582,500Required information Problem 7-58 (Algo) Determine depreciation under three methods (LO7-4) [The following information applies to the questions displayed below.] Quick Copy purchased a new copy machine. The new machine cost $106,000 including installation. The company estimates the equipment will have a residual value of $26,500. Quick Copy also estimates it will use the machine for four years or about 8,000 total hours. Actual use per year was as follows: Year 1 2 Year 1 2 3 4 Problem 7-5B (Algo) Part 3 3. Prepare a depreciation schedule for four years using the activity-based method. (Round your "Depreciation Rate" to 3 decimal places and use this amount in all subsequent calculations. Round answers to the nearest whole dollar.) 3 4 Total Hours Used 2,800 2,000 2,000 3,200 $ QUICK COPY Depreciation Schedule-Activity-Based End of Year Amounts Depreciation Expense 0 Accumulated Depreciation Book Value
- Required information Problem 7-5B (Algo) Determine depreciation under three methods (LO7-4) [The following information applies to the questions displayed below.] Quick Copy purchased a new copy machine. The new machine cost $128,000 including installation. The company estimates the equipment will have a residual value of $32,000. Quick Copy also estimates it will use the machine for four years or about 8,000 total hours. Actual use per year was as follows: Year 1234 Hours Used 2,100 1,900 1,900 3,300 Problem 7-5B (Algo) Part 1 Required: 1. Prepare a depreciation schedule for four years using the straight-line method. (Do not round your intermediate calculations.) QUICK COPY Depreciation Schedule-Straight-Line End of Year Amounts Year Depreciation Accumulated Book Value Expense Depreciation 1 2 3 4 TotalExercise 9.3 (Algo) Depreciation for Partial Years (LO9-3) On August 3, Cinco Construction purchased special-purpose equipment at a cost of $7,600,000. The useful life of the equipment was estimated to be eight years, with an estimated residual value of $20,000. a. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the straight-line depreciation method (half-year convention). b. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the 200 percent declining-balance method (half-year convention) with a switch to straight-line when it will maximize depreciation expense. c. Which of these two depreciation methods (straight-line or double-declinin.Hi what is the solution to this problem? please 2. PR.10-04.ALGO Depreciation by Two Methods; Sale of Fixed Asset New lithographic equipment, acquired at a cost of $843,750 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $72,600. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On March 4 of Year 5, the equipment was sold for $123,600. Required: 1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the following methods: a. Straight-line method Year DepreciationExpense Accumulated Depreciation,End of Year Book Value,End of Year 1 $fill in the blank 7576dbf1f067fc1_1 $fill in the blank 7576dbf1f067fc1_2 $fill in the blank 7576dbf1f067fc1_3 2 $fill in the…
- 19. Dewey Company purchased a machine that was installed and placed in service on January 2, 2001, at a total cost of $480,000. Residual value was estimated at $80,000. The machine is being depreciated over ten years by the double-declining-balance method. For the year 2002, Dewey should record depreciation expense of a. $64,000. b. $76,800. c. $80,000. d. $96,000.On January 1, 20x1, Wonder Co.'s equipment with a historical mst of P9,000,000 and accumulated depreciation P4,200,000 is determined to be impaired. The appropriate carrying amount on this date is estimated to be only P3,000,000 and that the remaining useful life should only be 3 years instead of 8 years. How much is the accumulated depreciation on December 31, 20x1? a. 7,000,000 b. 6,000,000 dapted) c. 5,200,000 d. 1,000,0007. On January 1, 2018 an entity purchased for P4,800,000 machine with useful life of ten years on residual ofP200,000. The machine was depreciated by the double declining balance method. The entity changed to thestraight line method on January 1, 2020 and the residual value did not change. What is the accumulateddepreciation on December 31,2020?a. 2,087,000 c. 2.188,000b. 2,112,000 d. 2,015,200