Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ed Font Styles anting Dictate sensitiv A Aay 20 Paragraph Styles Voice Sensitivity Question 3 (14 Marks) On January 1, 2019 Safe Consulting Inc. (SCI)

image text in transcribed
Ed Font Styles anting Dictate sensitiv A Aay 20 Paragraph Styles Voice Sensitivity Question 3 (14 Marks) On January 1, 2019 Safe Consulting Inc. (SCI) acquired heavy construction equipment for $1,010,000 SCI expects that the residual value of the equipment at the end of its 5-year life will be $200,000 and expects that equipment will operate for a total of 90,000 equipment working hours. Actual equipment working hours used for the years ended December 31, 2019 and December 31, 2020 are 15,000 and 24,000, respectively. Required: a) Compute the depreciation expense for the years ended December 31, 2019 and December 31, 2020 under the Straight line, Declining Balance at 30% rate, and thUnits of Production methods and insert your answers into the table below. Round to the nearest whole number (6 Marks) Depreciation Depreciation Expense for 2019 Depreciation Expense for 2020 Method Straight Line Method Declining Balance (30% rate) Units-of- Production Method b) Assuming that the manager's bonus depends on the total reported income for the first two years (.e. for 2019 and 2020), which method of depreciation would the manager prefer? Briefly explain why? (2 marks) c) Assume that SCI used the straight-line method of depreciation and decided to sell the equipment on July 1, 2021 for $800,000. Calculate the amount of the gain or loss on the sale of equipment below and state whether it is a gain or loss (2 Marks) d) Assume that on January 1, 2021. SCI determined that the total useful life of squipment should be 8 years instead of 5 years, and the straight line method of depreciation is used. The residual value is unchanged Compute the following (2 marks each): 1. The book value of the equipment on January 1, 2021 2. The depreciation expense for 2021 Dords D Focus 2021-02. Handout Teri

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Integrated Concepts And Procedures

Authors: Donald H. Taylor, G. William Glezen

5th Edition

0471524239, 978-0471524236

More Books

Students also viewed these Accounting questions