Hohnberger Enterprises purchased equipment on March 15, 2015, for $94,800
Hohnberger Enterprises purchased equipment on March 15, 2015, for $94,800. The company also paid the following amounts: $720 for freight charges; $240 for insurance while the equipment was in transit; $1,320 for a one-year insurance policy; $2,110 to train employees to use the new equipment; and $1,920 for testing and installation. The equipment was ready for use on April 1, but the company did not start using it until May
1. Hohnberger has estimated the equipment will have a 10-year useful life with no residual value. It expects to consume the equipment’s future economic benefits evenly over the useful life. The company has a December 31 year end.
a) Calculate the cost of the equipment.
b) When should the company begin depreciating the equipment: March 15, April 1, or May 1?
c) Which depreciation method should the company use? (Straight line, units of production method, or diminishing decline?)
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d) Using the method chosen in (c), calculate the depreciation on the equipment for 2015 2. Nissong Ltd. purchased a new extraction device on April 4, 2012, at a cost of $165,600. The company estimated that the extraction device would have a residual value of $16,320. The extraction device is expected to be used for 9,800 working hours during its four-year life. Actual extraction device usage was 570 hours in 2012; 2,450 hours in 2013; 2,960 hours in 2014; 2,660 hours in 2015; and 1,160 hours in 2016. Nissong has a December 31 year end. Calculate depreciation expense for years 2012, 2013, 2014, 2015, 2016 for the extraction device under each of the following methods: (1)Â Straight-line method. (2)Â Diminishing-balance using double the straight-line rate method. (3)Â Units-of-production method Which method results in the highest depreciation expense over the life of the asset? Highest profit? Highest cash flow? (Straight line method, diminishing balance method, units of production method, or all three methods?)
Answers
Status NEW
Posted 31 May 2017 07:05 AM
My Price 15.00
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file 1496217235-335591_1_8633627.docx preview (1229 words )
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