The following independent situations describe facts concerning the ownership of various assets.
(a) Dickenton Company purchased a tooling machine in 1998 for $85,000. The machine was being depreciated on the straight-line method over an estimated useful life of 30 years with no salvage value. At the beginning of 2013, when the machine had been in use for 15 years, Dickenton paid $17,000 to overhaul the machine. As a result of this improvement, Dickenton estimated that the useful life of the machine would be extended an additional five years.
(b) Andresen Manufacturing Co., a calendar-year company, purchased a machine for $50,000 on January 1, 2011. At the date of purchase, Andresen incurred the following additional costs:
Loss on sale of old machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,000
Freight cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900
Installation cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,900
Testing costs prior to regular operation. . . . . . . . . . . . . . . . . . . . . . . . . . . 800
The estimated salvage value of the machine was $8,000, and Andresen estimated that the machine would have a useful life of 15 years, with depreciation being computed using the straight-line method. In January 2013, accessories costing $2,925 were added to the machine to reduce its operating costs. These accessories neither prolonged the machine's life nor did they provide any additional salvage value.
(c) On July 1, 2013, Schiff Corporation purchased equipment at a cost of $48,000. The equipment has an estimated salvage value of $6,000 and is being depreciated over an estimated life of five years under the double-declining-balance method of depreciation. For the six months ended December 31, 2013, Schiff recorded a half-year's depreciation.
(d) Quinn Company acquired a tract of land containing an extractable natural resource. Geological surveys estimate that the recoverable reserves will be 4,000,000 tons and that the land will have a value of $800,000 after restoration. Relevant cost information follows:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,000,000
Tons mined and sold in 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 950,000
(e) In January 2013, Bradley Corporation entered into a contract to acquire a new machine for its factory. The machine, which had a cash price of $150,000, was paid for as follows:
Down payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,000
400 shares of Bradley common stock with an agreed-upon value of $325 per share . . . 130,000
....................................................................................................... $170,000
Prior to the machine's use, installation costs of $10,000 were incurred. The machine has an estimated useful life of 16 years and an estimated salvage value of $20,000. The straight-line method of depreciation is used.
Instructions:
In each case, compute the amount of depreciation or depletion for 2013.