Question
Problem 1 (31.5 points) New Style Corporation is a company that manufactures and sells chairs. On 1/1/20, the company purchases a piece of manufacturing equipment
Problem 1 (31.5 points)
New Style Corporation is a company that manufactures and sells chairs. On 1/1/20, the company purchases a piece of manufacturing equipment for $3,100,000 cash. The expected residual value is $200,000 and the useful life is 5 years. The company expects to produce 5,000,000 chairs with the equipment 1,200,000 chairs in 2020; 1,400,000 chairs in 2021; 1,000,000 chairs in 2022; and 600,000 chairs 2023; and 800,000 chairs in 2024.
SHOW YOUR WORK! Round per unit to the nearest cent.
Assume that New Style Corporation uses the Straight-Line method of depreciation.
|
| 2020 | 2021 | 2022 | 2023 | 2024 |
| Depreciation Expense for the year | $5,80,000 | $5,80,000 | $5,80,000 | $5,80,000 | $5,80,000 |
| Accumulated Depreciation at year-end | $5,80,000 | $11,60,000 | $17,40,000 | $23,20,000 | $29,00,000 |
| PPE, Net on year-end Balance Sheet | $25,20,000 | $19,40,000 | $13,60,000 | $7,80,000 | $2,00,000 |
Straight Line-
Cost= $31,00,000
Residual Value= $2,00,000
Depreciable Cost=$29,00,000
Useful Life= 5 yrs.
Depreciation Expense=$5,80,000
Assume that New Style Corporation uses the Units-of-Activity method of depreciation.
|
| 2020 | 2021 | 2022 | 2023 | 2024 |
| Depreciation Expense for the year | $ 6,96,000 | $ 8,12,000 | $ 5,80,000 | $ 3,48,000 | $ 4,64,000 |
| Accumulated Depreciation at year-end | $ 6,96,000 | $ 15,08,000 | $ 20,88,000 | $ 24,36,000 | $ 29,00,000 |
| PPE, Net on year-end Balance Sheet | $ 24,04,000 | $ 15,92,000 | $ 10,12,000 | $ 6,64,000 | $ 2,00,000 |
Unit of Activity-
Cost= $31,00,000
Residual Value= $2,00,000
Depreciable Cost=$29,00,000
Total no. of units= 5000000
Depreciation per unit= $0.58
Assume that New Style Corporation uses the Double-Declining-Balance method of depreciation.
|
| 2020 | 2021 | 2022 | 2023 | 2024 |
| Depreciation Expense for the year | $12,40,000 | $7,44,000 | $4,46,400 | $ 2,67, 840 | $2,01,760 |
| Accumulated Depreciation at year-end | $ 12,40,0000 | $19,84,000 | $24,30,400 | $ 26,98, 240 | $ 29,00,000 |
| PPE, Net on year-end Balance Sheet | $18,60,000 | $11,16,000 | $6,69,600 | $4,01,760 | $2,00,000 |
Double- Declining- Balance
Useful life= 5 years
Rate of depreciation= 40% ( (100%) / (5)) x 2
( Could you please show the work for this, just for one of each one so 3 in total please also can you double-check the answers. Thanks. )
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Integrated Reporting
Authors: Chiara Mio
1st Edition
1137551488, 9781137551481
