E11-4

a. Straight-line.

$315,000 - $15,000 = 300,000.00

300000/10 yrs= 30,000.00

b. Units-of-output.

$300,000 /240,000 units = 1.25

25,500 units X $1.25 = 31,875.00

c. Working hours.

$300,000 ÷ 25,000 hours = $ 12.00 per hour

2,650 hrs. X $12.00 $ 31,800.00

d.Sum-of-the-years’-digits

10 + 9 + 8 + 7 + 6 + 5 + 4 + 3 + 2 + 1 = 55
(10/55) * 300,000 * 1/3 = $ 18,182
(9/55) * 300,000 * 2/3 = $ 32,727.27
$ 50,909.09

e.Declining-balance

rate= (1/10)*2= 20%

2017 (315000*20%)*8/12= 42,000.00

2018 (315000-42000)*0.2= 54,600.00
E11-9

Machine cost salvage useful life

A $ 40,500 $ 5,500 10
B $ 33,600 $ 4,800 9
C $ 36,000 $ 3,600 9
D $ 19,000 $ 1,500 7
E $ 23,500 $ 2,500 6
$ 152,600

a-

Straight line dep per year Dep. Basis

$ 3,500.00 $ 35,000
$ 3,200.00 $ 28,800
$ 3,600.00 $ 32,400
$ 2,500.00 $ 17,500
$ 3,500.00 $ 21,000
$ 16,300.00 $ 134,700

Composite depreciation rate 16300/152600 11%

Composite Life 134700/16300 8.263804 years

b-

Depreciation expense $ 16,300.00

Accumulated Depreciation - Equipment $ 16,300.00

c-
Cash $ 4,800.00
Accumulated Depreciation - Equipment $ 12,176.93
Loss on sale of the equipment $ 2,023.07
Equipment $ 19,000
E11-11

No adjusting entry is required. Future entries will be modified as per new salvage & useful life.

Straight-line method $ 56,000 / 8 yrs = $ 7,000 $ 35,000

Straight-line method $ 20,500 / 5 yrs = $ 4,100

the entry to record depreciation for 2018

Depreciation Expense $ 4,100
Accumulated Depreciation - Equipment $ 4,100
E11-17

Cost $ 9,000,000
Accumulated dep $ 1,000,000
Expected future net cash flows $ 7,000,000
Fair value $ 4,800,000

a-
Book value $ 8,000,000
Less: Fair value $ 4,800,000
Add: Cost of disposal $ 20,000
Loss on impairment $ 3,220,000

Loss on impairment $ 3,220,000

Accumulated Depreciation - Equipment $ 3,220,000

b-
no deprecation expense is necessary.

c-

Fair value $ 5,300,000

Less: Cost of disposal $ 20,000 $ 5,280,000

Book value $ 8,000,000

Less: Loss on impairment $ 3,220,000 $ 4,780,000
$ 500,000

Accumulated Depreciation - Equipment $ 500,000

Recovery of loss on impairment $ 500,000