Suppose FedEx purchased equipment on January 1, 2016, for $44,000 The expected useful life of the equipment is 10 years or 100,000 units of production, and its residual value is $4,000 Under three depreciation methods, the annual depreciation expense and the balance of accumulated depreciation at the end of 2016 and 2017 are Method A Method B Method C Annual Annual Annual Depreciation Accumulated Depreciation Accumulated Depreciation Accumulated Year Expense Depreciation Expense Depreciation Expense Depreciation 2016 $4,000 $4,000 $8,800 $8,800 $1,200 $1,200 2017 4,000 8,000 7,040 15,840 5,600 6,800 Identify the depreciation method used in each instance, and show the equation and computation for each round to the nearest dollar Assume 3,000 units produced in the first year and 14,000 in the second Assume continued use of the same method through year 2018 Determine the annual depreciation expense, accumulated depreciation, and book value of the equipment for 2016 through 2018 under each method, assuming 12,000 units of production in 2018 Suppose FedEx purchases a warehouse building on September 1 for $500,000 The buildings estimated life is 20 years, and its estimated residual value is $80,000 FedExs accounting year ends on May 31 How should FedEx calculate depreciation for September through May Suppose a hot dog stand cost $50,000 and that the company originally believed the asset had a 10 year useful life with no residual value After four years, the company believes the asset will remain useful for an additional 10 years Assume straight line depreciation Calculate accumulated depreciation at the end of the fourth year Calculate depreciation expense for the fifth year Define the following Fully depreciated asset Intangible Asset Amortization Patent Goodwill Refer back to the data in the first problem Suppose the income tax authorities permitted a choice between these depreciation methods Which method would FedEx select for income tax purposes Why Suppose FedEx purchased the equipment described in the table on January 1, 2016 Management has depreciated the equipment by using the double declining balance method On July 1, 2018, FedEx sold the equipment for $27,000 cash Record depreciation for 2018 and the sale of the equipment on July 1, 2018

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Suppose FedEx purchased equipment on January 1, 2016, for $44,000. The expected useful life of the equipment is 10 years or 100,000 units of production,

Suppose FedEx purchased equipment on January 1, 2016, for $44,000. The expected useful life of the equipment is 10 years or 100,000 units of production, and its residual value is $4,000. Under three depreciation methods, the annual depreciation expense and the balance of accumulated depreciation at the end of 2016 and 2017 are:

	*Method A*		*Method B*		*Method C*
	Annual		Annual		Annual
	Depreciation	Accumulated	Depreciation	Accumulated	Depreciation	Accumulated
Year	Expense	Depreciation	Expense	Depreciation	Expense	Depreciation
2016	$4,000	$4,000	$8,800	$8,800	$1,200	$1,200
2017	4,000	8,000	7,040	15,840	5,600	6,800

1. Identify the depreciation method used in each instance, and show the equation and computation for each; round to the nearest dollar. Assume 3,000 units produced in the first year and 14,000 in the second.
2. Assume continued use of the same method through year 2018. Determine the annual depreciation expense, accumulated depreciation, and book value of the equipment for 2016 through 2018 under each method, assuming 12,000 units of production in 2018.
Suppose FedEx purchases a warehouse building on September 1 for $500,000. The buildings estimated life is 20 years, and its estimated residual value is $80,000. FedExs accounting year ends on May 31.
1. How should FedEx calculate depreciation for September through May?
Suppose a hot dog stand cost $50,000 and that the company originally believed the asset had a 10-year useful life with no residual value. After four years, the company believes the asset will remain useful for an additional 10 years. Assume straight-line depreciation.
1. Calculate accumulated depreciation at the end of the fourth year.
2. Calculate depreciation expense for the fifth year.
Define the following:
1. Fully depreciated asset
2. Intangible Asset
3. Amortization
4. Patent
5. Goodwill
Refer back to the data in the first problem.
1. Suppose the income tax authorities permitted a choice between these depreciation methods. Which method would FedEx select for income tax purposes? Why?
2. Suppose FedEx purchased the equipment described in the table on January 1, 2016. Management has depreciated the equipment by using the double-declining-balance method. On July 1, 2018, FedEx sold the equipment for $27,000 cash. Record depreciation for 2018 and the sale of the equipment on July 1, 2018.