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Hey, Could someone please help me with this? I'm not 100 percent sure what I am supposed to do where it says computation. Comparison of
Hey,
Could someone please help me with this? I'm not 100 percent sure what I am supposed to do where it says computation.
Comparison of Depreciation Methods P4. Italian Construction Company purchased a new crane for S360,500 at the begin- ning of year 1. The crane has an estimated residual value of $35,000 and an estimated useful life of six years. The crane is expected to last 10,000 hours. It was used 1,800 hours in year 1; 2,000 hours in year 2; 2,500 hours in year 3; 1,500 hours in year 4 1,200 hours in year 5; and 1,000 hours in year 6. REQUIRED 1. Compute the annual depreciation and carrying value for the new crane for each of the six years under each of the following methods: (a) straight-line, (b) production, and (c) double-declining-balance (round percentage to two decimal places.) 2. If the crane is sold for $250,000 after year 3, what would be the amount of gain or loss under each method? 3. ACCOUNTING CONNECTION Do the three methods differ in their effect on the company's profitability? Do they differ in their effect on the company's operating cash flows? Explain Depreciation Table Depreciation Carrying Method Computation Year Value a. Straight-line 1 325,500 54,250.00 $ 306,250.00 6 5 6 6 b. Production 1,800 58,590.00 $ 301,910.00 $325,500 10,000 2,000 25,500 10,000 3 5 $ 35,000.00 6 5 120155 240,345 33.33% is c. Double 1$ 360,500 declining 240,345 33.33% 2 balance 33.33% 3 33.33% 33.33% 5 7,485s 35,000 6 35,000Step by Step Solution
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