Reference no: EM131293002
On january 3 2015, Azul Enterprises, Inc, paid $281,000 for equipment used in manufacuring automotive supplies. In addition to the basic purchase proce, the company paid $700 transportation charges, $300 insurance for the equipment while in tansit, $11,000 sales tax, and $2,000 for a special platform on which to place the equipment in the plant. Azul Enterprises, Inc, management estimates that the equipment will remain in serivce for the 5 years and have a risidual value of $35,000. The equipment will produce 60,000 units for the first year, with annual production decreasing by 5,000 units during each of the next 4 years (55,000 units in year 2, 50,000 units in year 3 and so on for a total of 250,000 units). In trying to decide which depreciation method to use, Azul Enterprises, Inc, requested a depreciation schedule for each of the three depreciation methods (straight-line, units-of-production and double-declining-balance)
Requirements
1) For each depreciaiton method, prepare a depreciation schedule showing asset cost, depreciation expense, accumulated depreciation, and asset book value for each year of the asset's life. For the units-of-production method, round depreciation per unit to three decimal places.
2) Azul Enterprises, Inc, prepares financial statements using the depreciation method that reports the highest income in the early years of asset use. For income tax purposes, the company uses the depreciation method that minimizes income taxes in the early years. Consider the first year Azul Enterprises, Inc, uses the equipment. Identify the depreciation methods that meet Azul Enterprises objectives, assuming the income tax authorities permit the use of any method.
3) Show how Azul Enterprises, Inc, would report equipment on the December 31, 2015, balance sheet for each depreciation method.
Template on how to enter the answers
Requirement 1: Straight-Line Depreciation Schedule Depreciation for the year
Date Asset cost Depreciation rate Depreciable cost Depreciaiton expense Accumulated Depreciation Book value
Any Computations:
Units-of-production Depreciaiton Schedule Depreciation for the year
Date Asset cost Depreciation per unit Number of units Depreciation Expense Accumuated Depreciation Book Value
Any Computations:
Double-Declining-Balance Depreciation Schedule Depreciation for the year
Date Asset Cost DDB Depreciation rate Book Value Depreciation Expense Accumulated Depreciation Book Value
Any Computations:
Requirement 2 is to identify the method
Requirement 3
Method of deprecation
Straight-line Units of Production Declinging Balance
|
Calculate the number of ounces of ocean scent
: Each gallon of Old Guard, a popular afters have lotion, requires 3 ounces of ocean scent. Budgeted production of Old Guard for the first three quarters of 2013 is: Calculate the number of ounces of ocean scent to be purchased in each of the first two..
|
|
Demand increases when price decreases
: In economics, the demand for a product is considered downward sloping. This implies that demand increases when price decreases. Is this always true? Name some products for which the demand remains unchanged regardless of the price. Also, mention s..
|
|
How you would research the growth in the use of credit cards
: Indicate how you would research the growth in the use of credit cards and the pricing of retail goods in general.
|
|
Discuss relationship between profits innovation and price
: Discuss the relationship between profits, innovation and price. In your discussion, offer the direction that these 3 variables move (up, down, etc.) in relation to each other.
|
|
Prepare depreciation schedule showing asset cost
: On january 3 2015, Azul Enterprises, Inc, paid $281,000 for equipment used in manufacuring automotive supplies. In addition to the basic purchase proce and $2,000 for a special platform on which to place the equipment in the plant. For each depreciai..
|
|
Explain which frames were more useful in your analysis
: Explain which frames were more useful in your analysis and justify your reasoning.Explain an experience you have faced in your own career that is similar to the situation presented in this case. Analyze the approach taken and assess its success.
|
|
What are marketing decision support mechanisms
: How does a marketing information system differ from marketing research? What are marketing decision-support mechanisms? How do they relate to the marketing information system?
|
|
Suggest potential applications for expert systems
: What type of questions could a manager expect to answer using the company's marketing decision-support system? What makes a decision-support system successful?
|
|
Valid applications arrive every week
: The HR department is trying to fill a vacant position for a job with a small talent of pool. Valid applications arrive every week or so, and the applicants all seem to bring different levels of expertise.
|