Valix Finacc vol 1 Problem 17-10

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-10

                                                                                                                                                                                                                               Depreciable            Life in            Annual

Assets                              Cost          Salvage              cost                     years        depreciation

Building                       6,100,000         100,000           6,000,000                  20                  300,000

Machinery                   2,550,000           50,000           2,500,000                   5                 500,000

Equipment                  1,030,000           30,000           1,000,000                  10                  100,000

                                   9,680,000                               9,500,000                                       900,000

a. Composite depreciation rate = 900,000 / 9,680,000 = 9.3%

b. Average life = 9,500,000 / 900,000 = 10.56 years

c. Depreciation                                                                                     900,000

Accumulated depreciation                                                                             900,000

d. Cash                                                                                                   40,000

    Accumulated depreciation                                                           2,510,000

Machinery                                                                                                      2,550,000

e. Depreciation                                                                                    663,090

Accumulated depreciation (9,680,000 – 2,550,000 x 9.3%)                              663,090