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Chapter 28

The document presents various depreciation calculations for assets using different methods, including straight line, service hours, and production methods. It details the acquisition costs, accumulated depreciation, and carrying amounts for multiple years and assets. Additionally, it includes requirements for composite life, rates, and depreciation expenses for different machinery and equipment.

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Hope Elizabeth Soberano
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10 views7 pages

Chapter 28

The document presents various depreciation calculations for assets using different methods, including straight line, service hours, and production methods. It details the acquisition costs, accumulated depreciation, and carrying amounts for multiple years and assets. Additionally, it includes requirements for composite life, rates, and depreciation expenses for different machinery and equipment.

Uploaded by

Hope Elizabeth Soberano
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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PROBLEM 28-3

Straight line method


2,600,000.00 -100,000.00 500,000.00
=
5.00

Depreciation table
Accumulated Carrying
Year Particular Depreciation
depreciation Amount
Acquisition cost 2,600,000.00
2024 Depreciation 500,000.00 500,000.00 2,100,000.00
2025 Depreciation 500,000.00 1,000,000.00 1,600,000.00
2026 Depreciation 500,000.00 1,500,000.00 1,100,000.00
2027 Depreciation 500,000.00 2,000,000.00 600,000.00
2028 Depreciation 500,000.00 2,500,000.00 100,000.00
2,500,000.00

Service hours method


2,600,000.00 -100,000.00 20.00
=
125,000.00

Depreciation table
Accumulated Carrying
Year Particular Depreciation
depreciation Amount
Acquisition cost 2,600,000.00
2024 30,000.00 600,000.00 600,000.00 2,000,000.00
2025 25,000.00 500,000.00 1,100,000.00 1,500,000.00
2026 20,000.00 400,000.00 1,500,000.00 1,100,000.00
2027 22,000.00 440,000.00 1,940,000.00 660,000.00
2028 28,000.00 560,000.00 2,500,000.00 100,000.00
2,500,000.00

Production method
2,600,000.00 -100,000.00 5.00
=
500,000.00

Depreciation table
Accumulated Carrying
Year Particular Depreciation
depreciation Amount
Acquisition cost 2,600,000.00
2024 110,000.00 550,000.00 550,000.00 2,050,000.00
2025 130,000.00 650,000.00 1,200,000.00 1,400,000.00
2026 100,000.00 500,000.00 1,700,000.00 900,000.00
2027 120,000.00 600,000.00 2,300,000.00 300,000.00
2028 40,000.00 200,000.00 2,500,000.00 100,000.00
2,500,000.00
PROBLEM 28-4

Residual Depreciable Annual


Cost Useful life
value amount depreciation
Building 6,500,000.00 -500,000.00 6,000,000.00 15.00 400,000.00
Machinery 2,350,000.00 -350,000.00 2,000,000.00 5.00 400,000.00
Equipment 1,150,000.00 -150,000.00 1,000,000.00 10.00 100,000.00
### 9,000,000.00 900,000.00

Requirement A:
Composite life = 9,000,000.00 10.00
900,000.00

Composite rate= 900,000.00 9.00%


###

Requirement B:
Depreciation expense 900,000.00
Accumulated depreciation 900,000.00

Requirement C:
Cash 100,000.00
Accumulated depreciation 2,250,000.00
Machinery 2,350,000.00

Requirement D:
Depreciation expense 688,500.00
Accumulated depreciation 688,500.00

Total cost ###


Less: cost of machinery -2,350,000.00
Remaining cost 7,650,000.00
x composite rate 0.09
Depreciation for 6th year 688,500.00
PROBLEM 28-5
Residual Depreciable Annual
Cost Useful life
value amount depreciation
Machine A 550,000.00 -50,000.00 500,000.00 20.00 25,000.00
Machine B 200,000.00 -20,000.00 180,000.00 15.00 12,000.00
Machine C 40,000.00 0.00 40,000.00 5.00 8,000.00
790,000.00 720,000.00 45,000.00

Requirement A:
Composite life 720,000.00 16.00
45,000.00

Composite rat 45,000.00 5.70%


790,000.00

Requirement B:
Depreciation expense 45,000.00
Accumulated depreciation 45,000.00

Requirement C:
Accumulated depreciation 40,000.00
Machinery 40,000.00

Requirement D:
Accumulated depreciation 42,750.00
Machinery 42,750.00

Total cost 790,000.00


Less: cost of Machine C -40,000.00
Remaining cost 750,000.00
x composite rate 5.70%
Depreciation for 6th year 42,750.00
PROBLEM 28-6

Requirement #1:
Total cost 5,000,000.00
Add: purchase 2,500,000.00
Less: retirement -1,000,000.00
Remaining cost 6,500,000.00
x composite rate 25.00%
Depreciation for 2024 1,625,000.00

Requirement #2:
Jan. 1, 2024 Equipment 2,500,000.00
Cash 2,500,000.00

Dec. 31, 2024 Cash 350,000.00


Accumulated depreciatio 650,000.00
Equipment 1,000,000.00

Dec. 31, 2024 Depreciation expense 1,625,000.00


Accumulated depreciation 1,625,000.00

Requirement #3:
Accumulated depreciation, 1/1/24 3,000,000.00
Add: depreciation for 2024 1,625,000.00
Less: retirement -650,000.00
Accumulated depreciation, 12/31/24 3,975,000.00

Requirement #4:
Total cost 6,500,000.00
Less: Accumulated depreciation -3,975,000.00
Carrying amount 2,525,000.00
PROBLEM 28-7
Requirement #1:
Total cost of main milling machine 7,500,000.00
Less: residual value 0.00
Depreciable amount 7,500,000.00
Divided by: useful life 10.00
Annual depreciation 750,000.00
x years passed 6 years
Depreciation - 12/31/24 4,500,000.00
Add: depreciation for 4/1/18 to 12/31/18 562,500.00
Accumulated depreciation - 12/31/24 5,062,500.00

Cost of main milling machine 7,500,000.00


Less: Accumulated depreciation -5,062,500.00
Carrying amount of main milling machine 2,437,500.00

Requirement #2:
Total cost of special milling machine 1,200,000.00
Less: residual value 0.00
Depreciable amount 1,200,000.00
Divided by: useful life 6.00
Annual depreciation 200,000.00
x years passed 6 years
Depreciation - 4/1/24 1,200,000.00

Cost of main milling machine 1,200,000.00


Less: Accumulated depreciation -1,200,000.00
Carrying amount of main milling machine 0.00

Requirement #3:
Total cost of special milling machine 2,000,000.00
Less: residual value -400,000.00
Depreciable amount 1,600,000.00
Divided by: useful life 4.00
Annual depreciation 400,000.00
x months 9/12
Depreciation - 4/1/24 300,000.00

Requirement #4:
Main milling 750,000.00
Special #1 50,000.00
Special #2 300,000.00
Accumulated depreciation 1,100,000.00

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