Deck 18: Depreciation

Question 1

Apex Electronics
​
Apex Electronics uses the straight-line method of depreciation. Electronic equipment costing $112,500 has an estimated life of ten years and an estimated scrap value of $7,250.
Refer to Apex Electronics. Compute the annual depreciation amount.

Answer 1

$10,525​

Question 2

Mendocino Gas and Storage
​
Mendocino Gas and Storage uses the units-of-production method of depreciation. A piece of equipment costing $112,500 has 360,000 estimated hours of operation and an estimated scrap value of $8,100. It operated 56,000 hours in the first year.
Refer to Mendocino Gas and Storage. Compute the depreciation expense for the first year.​

Answer 2

$16,240

Question 3

XOSCCO Steel Company
​
XOSCCO Steel Company uses the straight-line method of depreciation. A new equipment costing $350,000 has an estimated life of ten years and an estimated scrap value of $6,500.
Refer to XOSCCO Steel Company. Compute the annual depreciation amount.

Answer 3

$34,350

Question 4

Northgate Coal Mining
​
Northgate Coal Mining uses the units of production method of depreciation. A piece of heavy equipment costing $368,000 produces an estimated 1,740,000 units in its life and has an estimated scrap value of $20,000. It produced 316,000 units in the first year.​
Refer to Northgate Coal Mining. Compute the depreciation for the first year.

Question 5

Mason Towel
​
Mason Towel uses the units-of-production method of depreciation. A new knitting machine was purchased for $22,500. It will produce an estimated 800,000 units in its life and has an estimated scrap value of $2,500. It produced 150,000 units in the first year.
Refer to Mason Towel. Compute the depreciation for the first year.​

Question 6

Voice Genesis, Inc.
​
Voice Genesis, Inc. uses the units-of-production method of depreciation. Electronic equipment costing $82,300 has 60,000 estimated hours of operation and an estimated scrap value of $2,500. It operated 20,000 hours in the first year.
Refer to Voice Genesis, Inc. Compute the book value at the end of the first year.​

Question 7

XOSCCO Steel Company
​
XOSCCO Steel Company uses the straight-line method of depreciation. A new equipment costing $350,000 has an estimated life of ten years and an estimated scrap value of $6,500.
Refer to XOSCCO Steel Company. Compute the book value of the equipment at the end of the fifth year.

Question 8

Voice Genesis, Inc.
​
Voice Genesis, Inc. uses the units-of-production method of depreciation. Electronic equipment costing $82,300 has 60,000 estimated hours of operation and an estimated scrap value of $2,500. It operated 20,000 hours in the first year.
Refer to Voice Genesis, Inc. Compute the depreciation expense for the first year.​

Question 9

Cole Camping Company, Inc.
​
Cole Camping Company, Inc. uses the double-declining-balance method of depreciation. A piece of equipment costing $37,500 has an estimated life of five years and an estimated scrap value of $2,700.
​Refer to Cole Camping Company, Inc. Compute the book value at the end of the second year.

Question 10

Miracle Manufacturing
​
Miracle Manufacturing uses the units-of-production method of depreciation. A piece of heavy equipment costing $112,500 produces an estimated 2,088,000 units in its life and has an estimated scrap value of $8,100. It produced 288,000 units in the first year.
Refer to Miracle Manufacturing. Compute the depreciation for the first year.​

Question 11

Mason Towel
​
Mason Towel uses the units-of-production method of depreciation. A new knitting machine was purchased for $22,500. It will produce an estimated 800,000 units in its life and has an estimated scrap value of $2,500. It produced 150,000 units in the first year.
Refer to Mason Towel. Compute the book value at the end of the first year.​

Question 12

Mendocino Gas and Storage
​
Mendocino Gas and Storage uses the units-of-production method of depreciation. A piece of equipment costing $112,500 has 360,000 estimated hours of operation and an estimated scrap value of $8,100. It operated 56,000 hours in the first year.
Refer to Mendocino Gas and Storage. Compute the book value at the end of the first year.​

Question 13

Perry Processing, Inc.
​
Perry Processing, Inc. uses the units-of-production method of depreciation. A packaging machine costing $108,500 has 40,000 estimated hours of operation and an estimated scrap value of $12,500. It operated 4,200 hours in the first year.
​
​Refer to Perry Processing, Inc. Compute the book value at the end of the first year.

Question 14

Rolex Watch Company
​
Rolex Watch Company uses the straight-line method of depreciation. A new lathe costing $222,500 has an estimated life of five years and an estimated scrap value of $8,500.
​
Refer to Rolex Watch Company. Compute the book value of the equipment at the end of the third year.

Question 15

Miracle Manufacturing
​
Miracle Manufacturing uses the units-of-production method of depreciation. A piece of heavy equipment costing $112,500 produces an estimated 2,088,000 units in its life and has an estimated scrap value of $8,100. It produced 288,000 units in the first year.
Refer to Miracle Manufacturing. Compute the book value at the end of the first year.​

Question 16

Northgate Coal Mining
​
Northgate Coal Mining uses the units of production method of depreciation. A piece of heavy equipment costing $368,000 produces an estimated 1,740,000 units in its life and has an estimated scrap value of $20,000. It produced 316,000 units in the first year.​
Refer to Northgate Coal Mining. Compute the book value at the end of the first year.​

Question 17

Perry Processing, Inc.
​
Perry Processing, Inc. uses the units-of-production method of depreciation. A packaging machine costing $108,500 has 40,000 estimated hours of operation and an estimated scrap value of $12,500. It operated 4,200 hours in the first year.
​
Refer to Perry Processing, Inc. Compute the depreciation expense for the first year.​

Question 18

Apex Electronics
​
Apex Electronics uses the straight-line method of depreciation. Electronic equipment costing $112,500 has an estimated life of ten years and an estimated scrap value of $7,250.
Refer to Apex Electronics. Compute the book value at the end of the third year.​

Question 19

Cole Camping Company, Inc.
​
Cole Camping Company, Inc. uses the double-declining-balance method of depreciation. A piece of equipment costing $37,500 has an estimated life of five years and an estimated scrap value of $2,700.
Refer to Cole Camping Company, Inc. Compute the amount of depreciation taken in the second year.​

Question 20

Rolex Watch Company
​
Rolex Watch Company uses the straight-line method of depreciation. A new lathe costing $222,500 has an estimated life of five years and an estimated scrap value of $8,500.
​
Refer to Rolex Watch Company. Compute the annual depreciation amount.​

Question 21

Brook Stone and Paving
​
Brook Stone and Paving purchased a new truck for $68,500. The truck has an estimated life of four years and an estimated scrap value of $4,500.The company uses the double-declining-balance method of depreciation.
Refer to Brook Stone and Paving. Compute the depreciation for the third year.​

Question 22

Lewiswhite Farms
Lewiswhite Farms uses the sum-of-the-years-digits method of depreciation. A farm tractor costing $40,000 has an estimated life of ten years and an estimated scrap value of $1,000.
​
Refer to Lewiswhite Farms. Compute the book value at the end of the fourth year. (Round depreciation amounts to the nearest dollar.)

Question 23

Reilly Construction Company
​
The bookkeeper for the Reilly Construction Company is computing depreciation for income tax purposes, using the figures from the MACRS tables supplied by the IRS. Reilly Construction Company purchased a truck in February 2005 for $40,000. In March 2005, a second truck was purchased for $48,000. Assume that allowable depreciation for each truck is 20% for the first year and 32% for the second year.

-Refer to Reilly Construction Company. Compute the total allowable cost recovery on the two trucks for the year 2006.

Question 24

The bookkeeper for the Martel Company is computing depreciation for income tax purposes, using the figures from the MACRS tables supplied by the IRS. The equipment being depreciated had a cost of $16,000 and falls under the class of equipment to be depreciated at a rate of 25% for the first year and 21.43% for the second year. The equipment was purchased and put into use during the first quarter. Compute the amount of depreciation expense for the first year.

Question 25

​Collenlee Company, Inc.
Collenlee Company, Inc. uses the double-declining-balance method of depreciation. A piece of equipment costing $50,000 has an estimated life of five years and an estimated scrap value of $4,000.
​
Refer to Collenlee Company, Inc. Compute the book value at the end of the second year.

Question 26

Zenix Electronic
​
Zenix Electronic uses the double-declining-balance method of depreciation. An oscilloscope costing $28,500 has an estimated life of five years and an estimated scrap value of $2,500.
Refer to Zenix Electronic. Compute the amount of depreciation taken in the second year. ​

Question 27

Warner Brothers Studios
​
Warner Brothers Studios uses the sum-of-the-years-digits method of depreciation. A camera unit costing $112,500 has an estimated life of ten years and an estimated scrap value of $8,100.
Refer to Warner Brothers Studios. Compute the book value at the end of the third year. (Round depreciation amounts to the nearest dollar.)​

Question 28

Reilly Construction Company
​
The bookkeeper for the Reilly Construction Company is computing depreciation for income tax purposes, using the figures from the MACRS tables supplied by the IRS. Reilly Construction Company purchased a truck in February 2005 for $40,000. In March 2005, a second truck was purchased for $48,000. Assume that allowable depreciation for each truck is 20% for the first year and 32% for the second year.

-Refer to Reilly Construction Company. Compute the total allowable cost recovery on the two trucks for the year 2005.​

Question 29

Dental Office
​
A dental office using the straight-line method of depreciation purchased equipment costing $72,000 and put it into use on June 1. The equipment is expected to have a useful life of ten years and an estimated resale value of $4,800.
Refer to the Dental Office scenario. Compute the book value at end of the third year.​

Question 30

Lewiswhite Farms
Lewiswhite Farms uses the sum-of-the-years-digits method of depreciation. A farm tractor costing $40,000 has an estimated life of ten years and an estimated scrap value of $1,000.
​
Refer to Lewiswhite Farms. Compute the amount of depreciation taken in the sixth year.

Question 31

Bellinger Broadcasting
​
Bellinger Broadcasting uses the double-declining-balance method of depreciation. A transmitter costing $112,500 has an estimated life of ten years and an estimated scrap value of $8,100.
Refer to Bellinger Broadcasting. Compute the book value at the end of the third year.​

Question 32

Brook Stone and Paving
​
Brook Stone and Paving purchased a new truck for $68,500. The truck has an estimated life of four years and an estimated scrap value of $4,500.The company uses the double-declining-balance method of depreciation.
Refer to Brook Stone and Paving. Compute the book value at the end of the third year.

Question 33

Warner Brothers Studios
​
Warner Brothers Studios uses the sum-of-the-years-digits method of depreciation. A camera unit costing $112,500 has an estimated life of ten years and an estimated scrap value of $8,100.
Refer to Warner Brothers Studios. Compute the amount of depreciation taken in the seventh year.

Question 34

Zenix Electronic
​
Zenix Electronic uses the double-declining-balance method of depreciation. An oscilloscope costing $28,500 has an estimated life of five years and an estimated scrap value of $2,500.
Refer to Zenix Electronic. Compute the book value at the end of the second year.​

Question 35

The bookkeeper for the Martel Company is computing depreciation for income tax purposes, using the figures from the MACRS tables supplied by the IRS. The equipment being depreciated had a cost of $16,000 and falls under the class of equipment to be depreciated at a rate of 20% for the first year and 32% for the second year. The equipment was purchased and put into use during the first quarter. Compute the total amount of depreciation expense through the end of the second year.

Question 36

​Collenlee Company, Inc.
Collenlee Company, Inc. uses the double-declining-balance method of depreciation. A piece of equipment costing $50,000 has an estimated life of five years and an estimated scrap value of $4,000.
​
Refer to Collenlee Company, Inc. Compute the amount of depreciation taken in the second year.

Question 37

Dental Office
​
A dental office using the straight-line method of depreciation purchased equipment costing $72,000 and put it into use on June 1. The equipment is expected to have a useful life of ten years and an estimated resale value of $4,800.
Refer to the Dental Office scenario. Compute the depreciation expense for June 1 through December 31 of the first tax year and all 12 months of the second and third years.​

Question 38

Bellinger Broadcasting
​
Bellinger Broadcasting uses the double-declining-balance method of depreciation. A transmitter costing $112,500 has an estimated life of ten years and an estimated scrap value of $8,100.
Refer to Bellinger Broadcasting. Compute the amount of depreciation taken in the third year.

Question 39

Young Manufacturing
​
Young Manufacturing uses the sum-of-the-years-digits method of depreciation. A piece of heavy equipment costing $37,500 has an estimated life of five years and an estimated scrap value of $2,700.
Refer to Young Manufacturing. Compute the book value at the end of the second year.​

Question 40

Young Manufacturing
​
Young Manufacturing uses the sum-of-the-years-digits method of depreciation. A piece of heavy equipment costing $37,500 has an estimated life of five years and an estimated scrap value of $2,700.
Refer to Young Manufacturing. Compute the amount of depreciation taken in the third year.

Question 41

Accounting Firm
​
An accounting firm using the sum-of-the-years-digits method of depreciation purchased office furniture costing $9,000 and put it into use on April 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $600.
Refer to the Accounting Firm scenario. Compute the book value at the end of the second year.

Question 42

Medical Office
​
A medical office using the double-declining-balance method of depreciation purchased office furniture costing $36,000 and put it in use on May 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $2,400.
Refer to the Medical Office scenario. Compute the book value at the end of the third year.​

Question 43

The California Crane Company purchased eight new cranes of different sizes and qualities. CCC uses the double-declining balance method of calculating depreciation. The data for each crane is given below. From this data, compute the first year depreciation for each crane and the value of each crane at the end of its first year of use.​
​

Question 44

​Publisher
​
A publisher using the sum-of-the-years-digits method of depreciation purchased office furniture costing $36,000 and put it into use on May 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $2,400.
Refer to the Publisher scenario. Compute the depreciation expense for May 1 through December 31 of the first year and all 12 months of the second year. (Round depreciation for each year to the nearest dollar.)

Question 45

Legal Office
​
A legal office using the straight-line method of depreciation purchased office furniture costing $36,000 and put it into use May 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $2,400.
​
Refer to the Legal Office scenario. Compute the book value at the end of the third year.​

Question 46

Medical Office
​
A medical office using the double-declining-balance method of depreciation purchased office furniture costing $36,000 and put it in use on May 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $2,400.
Refer to the Medical Office scenario. Compute the depreciation expense for May 1 through December 31 of the first tax year and all 12 months of the second and third years.​

Question 47

​Publisher
​
A publisher using the sum-of-the-years-digits method of depreciation purchased office furniture costing $36,000 and put it into use on May 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $2,400.
Refer to the Publisher scenario. Compute the book value at the end of the second year.​

Question 48

Accounting Firm
​
An accounting firm using the sum-of-the-years-digits method of depreciation purchased office furniture costing $9,000 and put it into use on April 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $600.
Refer to the Accounting Firm scenario. Compute the depreciation expense for April 1 through December 31 of the first tax year and all 12 months of the second year.

Question 49

Legal Office
​
A legal office using the straight-line method of depreciation purchased office furniture costing $36,000 and put it into use May 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $2,400.
​
Refer to the Legal Office scenario. Compute the depreciation expense for May 1 through December 31 of the first tax year and all 12 months of the second and third years.​

Question 50

An insurance office purchased office furniture costing $9,000 and put it into use on April 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $600. Using the straight-line method of depreciation, compute the book value at the end of the third year.​

Question 51

An insurance office purchased office furniture costing $9,600 and put it into use on April 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $600. Using the straight-line method of depreciation, compute the depreciation expense for April 1 through December 31 of the first year and all 12 months of the second year.

Question 52

Retail Store
​
A retail store using sum-of-the-years-digits method of depreciation purchased equipment costing $36,000 and put it use on June 1. The equipment is expected to have a useful life of 10 years and an estimated resale value of $2,400.
Refer to the Retail Store scenario. Compute the book value at the end of the second year.​

Question 53

Real Estate Office
​
A real estate office using the double-declining-balance method of depreciation purchased office furniture costing $9,000 and put it into use on April 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $600.
Refer to the Real Estate Office scenario. Compute the book value at the end of the third year.

Question 54

Real Estate Office
​
A real estate office using the double-declining-balance method of depreciation purchased office furniture costing $9,000 and put it into use on April 1. The furniture is expected to have a useful life of 10 years and an estimated resale value of $600.
Refer to the Real Estate Office scenario. Compute the depreciation expense for April 1 through December 31 of the first tax year and all 12 months of the second and third years.

Question 55

Day-Care Center
​
A day-care center using the double-declining-balance method of depreciation purchased equipment costing $36,000 and put it use on June 1. The equipment is expected to have a useful life of 10 years and an estimated resale value of $2,400.
Refer to the Day-Care Center scenario. Compute the book value at the end of the third year.​

Question 56

Retail Store
​
A retail store using sum-of-the-years-digits method of depreciation purchased equipment costing $36,000 and put it use on June 1. The equipment is expected to have a useful life of 10 years and an estimated resale value of $2,400.
Refer to the Retail Store scenario. Compute the depreciation expense for June 1 through December 31 of the first year and all 12 months of the second year.

Question 57

Day-Care Center
​
A day-care center using the double-declining-balance method of depreciation purchased equipment costing $36,000 and put it use on June 1. The equipment is expected to have a useful life of 10 years and an estimated resale value of $2,400.
Refer to the Day-Care Center scenario. Compute the depreciation expense for June 1 through December 31 of the first tax year and all 12 months of the second and third years.