On January 4, 2021, Brown Company paid $270,000 for a computer system. In addition to the basic purchase price, the company paid a setup fee of $1,800, sales tax of $6,900, and $31,300 for a special platform on which to place the computer. Brown's management estimates that the computer will remain in service for five years and have a residual value of $35,000. The computer will process 30,000 documents the first year, with annual processing decreasing by 2,500 documents during each of the next four years (that is, 27,500 documents in 2022; 25,000 documents in 2023; and so on). For help with deciding which depreciation method to use, the company president has requested a depreciation schedule for each of the three depreciation methods. If rounding is necessary, use two decimal places for the depreciation amount per document. Read the requirements. Requirement 1. For each of the generally accepted depreciation methods, prepare a depreciation schedule showing asset cost, depreciation expense, accumulated depreciation, and asset book value. Complete the straight-line depreciation schedule. Begin by filling out the schedule through 2022, and then complete the schedule by entering the amounts through 2025. (Enter the rate to two decimal places.) Date January 4, 2021 December 31, 2021 December 31, 2022 Cost 310000 Straight-Line Depreciation Schedule Depreciable Cost Rate 0.20 0.20 Yearly Expense 62000 62000 Accumulated Depreciation 62000 Book Value 310000 248000
On January 4, 2021, Brown Company paid $270,000 for a computer system. In addition to the basic purchase price, the company paid a setup fee of $1,800, sales tax of $6,900, and $31,300 for a special platform on which to place the computer. Brown's management estimates that the computer will remain in service for five years and have a residual value of $35,000. The computer will process 30,000 documents the first year, with annual processing decreasing by 2,500 documents during each of the next four years (that is, 27,500 documents in 2022; 25,000 documents in 2023; and so on). For help with deciding which depreciation method to use, the company president has requested a depreciation schedule for each of the three depreciation methods. If rounding is necessary, use two decimal places for the depreciation amount per document. Read the requirements. Requirement 1. For each of the generally accepted depreciation methods, prepare a depreciation schedule showing asset cost, depreciation expense, accumulated depreciation, and asset book value. Complete the straight-line depreciation schedule. Begin by filling out the schedule through 2022, and then complete the schedule by entering the amounts through 2025. (Enter the rate to two decimal places.) Date January 4, 2021 December 31, 2021 December 31, 2022 Cost 310000 Straight-Line Depreciation Schedule Depreciable Cost Rate 0.20 0.20 Yearly Expense 62000 62000 Accumulated Depreciation 62000 Book Value 310000 248000
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 18E
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