Reference no: EM132472345
Point a) Wildhorse Company acquires equipment at a cost of $50,000 on January 3, 2017. Management estimates the equipment will have a residual value of $7,000 at the end of its 4-year useful life. Assume that the company uses the diminishing-balance method and that the diminishing-balance depreciation rate is double the straight-line rate.
Question 1: Calculate the depreciation expense for each year of the equipment's life. (Round answers to 0 decimal places, e.g. 5,275.)
- Depreciation - 2017$
- Depreciation - 2018$
- Depreciation - 2019$
- Depreciation - 2020$
Point b) Sheridan Pants Company acquires a delivery truck on April 6, 2017, at a cost of $43,260. The truck is expected to have a residual value of $5,110 at the end of its 4-year life. Sheridan uses the nearest month method to pro-rate depreciation expense.
Question 2: Calculate annual depreciation expense for the first and second years using straight-line depreciation, assuming Sheridan has a calendar year end. (Round answers to 0 decimal places, e.g. 5,250.)
- Depreciation - 2017 $
- Depreciation - 2018 $
Point c) Sandhill Pants Company acquires a delivery truck on April 6, 2017, at a cost of $42,320. The truck is expected to have a residual value of $4,670 at the end of its 4-year useful life. Assume that the company has a policy of recording a half-year's depreciation in the year of acquisition and a half-year's depreciation in the year of disposal.
Question 3: Using the double diminishing-balance method, calculate the depreciation expense for each year of the equipment's life. (Round depreciation rate to 2 decimal places for all calculations, e.g. 33.33% and round answers to 0 decimal places, e.g. 5,276.)
- Depreciation - 2017
- Depreciation - 2018$
- Depreciation - 2019$
- Depreciation - 2020$
Point d) Carla Vista Technology purchased equipment on January 4, 2015, for $250,600. The equipment had an estimated useful life of 8 years and a residual value of $8,570. The company has a December 31 year end and uses straight-line depreciation. On December 31, 2017, the company tests for impairment and determines that the equipment's recoverable amount is $83,920.
Question 4: Calculate the equipment's carrying amount at December 31, 2017 (after recording the annual depreciation). (Round answers to 0 decimal places, e.g. 5,275.)
- Carrying amount Dec. 31, 2017
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