SE5, 9, E11, and 13
SE5 Straight Line method
Willobrook fitness center purchased a new step machine for $8,250. The apparatus is expected to last four years and have a residual value of $750. What will the depreciation expense be for each year under the straight-line method?
SE9 Natural resources
Narda Company purchased land containing an estimated 4,000,000 tons of ore for $16,000,000. The land will be worth $2,400,000 without the ore after eight years of active mining. Although the equipment needed for the mining will have a useful life for 20 years, it is not expected to be usable and will have no value after the mining on this site is complete. Compute the depletion charge per son and the amount of depletion are mined and sold. Also, compute the first-year depreciation on the mining equipment using the production method, assuming a cost of $19,200,000 with no residual value.
E11 Double-Declining-Balance Method
Percival burglar Alarm Systems Company purchased a computer for $1,120. It has an estimated useful life of four years and an estimated residual value of $120. Compute the depreciation charge for each of the four years using the double-declining- balance method.
E13 Disposal of Plant Assets
A piece of equipment that cost $64,800 and on which $36,000 of accumulated depreciation had been recorded was disposed of on January 2, the first day of business of the current year. For each of the following assumptions, compute the gain or loss on the disposal.
1. The equipment was discarded as having no value.
2. The equipment was sold for $12,000 cash.
3. The equipment was sold for $36,000 cash.
