Question
Shining Stars Ltd. reported the following results for its past three fiscal years (amounts in millions): 2018 2019 2020 Net income $35 $25 $45 1.
Shining Stars Ltd. reported the following results for its past three fiscal years (amounts in millions):
2018 | 2019 | 2020 | |
---|---|---|---|
Net income | $35 | $25 | $45 |
1. The company later discovers that its ending inventory for 2018 was overstated by 2.5 million. However its ending inventories for both 2019 and 2020 were correctly stated.
Required:
What was Shining Stars Ltd. correct total profit for the three-year period (that is, the sum of all three years)?
2.
Assume that at the beginning of 2020, Spud Organics Ltd. purchased a tractor at a cost of $108000. Spud Organics expects the tractor to remain useful for 5 years (4,000 hours) and to have a residual value of $15,000. Spud Organics expects to use the tractor 800 hours the first year and 1,000 hours each year during years 2 through 4 and 1,200 hours the last year.
Required:
What is Spud Organic's first-year depreciation on the tractor using the double diminishing balance method? Round your answer to the nearest dollar.
3.
Assume that at the beginning of 2020, The Rocky Mountaineer purchased a railcar at a cost of $500,000. Rocky Mountaineer expects the railcar to remain useful for 5 years and to have a residual value of $100,000.
Required:
Compute Rocky Mountaineer's fourth-year depreciation on the railcar using the double diminishing balance method.
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