Reference no: EM132004160

Questions -

1) XYZ Company purchased a new machine on January 1, 2002 for $92,000. The machine was assigned a 10-year life and a $1,000 residual value.

Calculate the amount of accumulated depreciation on the machine shown in the December 31, 2004 balance sheet assuming the company uses the double-declining balance depreciation method.

2) ABC Company purchased a piece of equipment on May 1, 2004 for $125,000. The equipment was assigned a residual value of $7,000 and an 8-year life. It was estimated that the equipment would be used to produce a total of 200,000 units over its life. The equipment was to be depreciated using the units of production depreciation method.

During 2004, the equipment was used to produce a total of 18,000 units. At December 31, 2005, the book value of the equipment was $99,748.

Calculate the number of units the equipment was used to produce in 2005.

3) The following information was available for ABC Company for 1999:

1. Contributed capital (i.e., common stock + paid-in capital) was $180,000 at January 1 and $230,000 at December 31

2. Retained earnings were $20,000 at the beginning of 1999 and $70,000 at the end of 1999

3. Dividends declared and paid during 1999 equaled 20% of the net income for the year

Using the information above, calculate ABC Company's return on equity (ROE) for 1999. Enter your answer as a percentage. For example, if the ROE was 10%, enter your answer as 10%.

4) On January 1, 2004, ABC Company purchased equipment for $98,000. The equipment was assigned a life of 12 years and a residual value of $14,000.

On January 1, 2009, ABC Company decided the life of the equipment should be revised from 12 to 15 years.

On January 1, 2014, ABC Company spent $50,000 to completely overhaul the equipment. This overhaul caused ABC Company to change the life of the equipment from 15 years to 19 years with a residual value at the end of the 19 years of $3,000.

Calculate the book value of the equipment at December 31, 2015 assuming ABC Company employs the straight line depreciation method.