New tire retreading equipment, acquired at a cost of $140,000 at the beginning of a fiscal year, has an estimated useful life of four years and an estimated residual value of $10,000. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected.
1a. Determine the annual depreciation expense for each of the estimated four years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the straight-line method. Straight-Line Method Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 1 2 3 4 1b. Determine the annual depreciation expense for each of the estimated four years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the double-declining-balance method. Double-Declining-Balance Method Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 1 2 ball 3 2. Illustrate the effects on the accounts and financial statements of the sale. Assume the double-declining-balance method of depreciation is used. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Balance Sheet Statement of Cash Flows Assets Liabilities Stockholders' Equity Statement of Cash Flows Income Statement 3. Illustrate the effects on the accounts and financial statements of the sale, assuming a sale price of $15,250 instead of $23,300. Also assume the double-declining-balance method of depreciation is used. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Balance Sheet Statement of Cash Flows Assets Liabilities + Stockholders' Equity Statement of Cash Flows Income Statement 1a. Determine the annual depreciation expense for each of the estimated four years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the straight-line method. Straight-Line Method Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 1 2 3 4 1b. Determine the annual depreciation expense for each of the estimated four years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the double-declining-balance method. Double-Declining-Balance Method Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 1 2 ball 3 2. Illustrate the effects on the accounts and financial statements of the sale. Assume the double-declining-balance method of depreciation is used. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Balance Sheet Statement of Cash Flows Assets Liabilities Stockholders' Equity Statement of Cash Flows Income Statement 3. Illustrate the effects on the accounts and financial statements of the sale, assuming a sale price of $15,250 instead of $23,300. Also assume the double-declining-balance method of depreciation is used. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Balance Sheet Statement of Cash Flows Assets Liabilities + Stockholders' Equity Statement of Cash Flows Income Statement
