Assignment:
Complete the following problems. You must show your work on the math problems to get full credit.
1. Consider the following data on an asset:
Cost of the asset, I: $25,000
Useful life, N: 5 years
Salvage value, S: $3,000
Compute the annual depreciation allowances and the resulting book values, using the straight-line depreciation method.
2. A company's accounting record shows the following:
Truck A Truck B
Useful Life (miles): 250,000 200,000
Miles Driven During Year: 13,000 11,000
Purchase Cost: $40,000 $30,000
Salvage Value: $4,250 $3,000
Determine the amount of depreciation for each truck during the year.
3. Consider the following data on an asset:
Cost of the asset, I: $35,000
Useful life, N: 7 years
Salvage value, S: $4,000
Compute the annual depreciation allowances and the resulting book values, using the double-declining-balance method.
4. Identify which of the following expenditures is considered as a capital expenditure that must be depreciated (capitalized):
a) Painted the warehouse building, both interior and exterior, for $16,500.
b) Installed a conveyor belt system to automate some part of a production processes for $25,000.
c) Purchased a fax machine for $8,000.
d) Paid $18,000 to lease a dump truck for eight months.
e) Purchased a new computer system for $5,000.
f) Purchased land to build a new facility for $400,000.
g) Installed a water dispenser in a company dining area for $3250.
h) Purchased a patent on an energy-saving device over six years at a cost of $42,000.
i) Repaved a parking lot for $15,000.
j) Purchased a spare part for a framing machine for $5,000.