Business, 16.10.2020 07:01 cvannesacanto

Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $42,000. The estimated useful life was five years and the residual value was $5,000. Assume that the estimated productive life of the machine is 20,000 units. Expected annual production was year 1, 4,500 units; year 2, 5,500 units; year 3, 4,500 units; year 4, 4,500 units; and year 5, 1,000 units. Required: Complete a depreciation schedule for each of the alternative methods.
a. Straight-line.
b. Units-of-production.
c. Double-declining-balance.
Which method will result in the highest net income in year 2

Answers: 2

Show answers

Answers

Answer from: jadaspells27

Depreciation schedule for :

Straight-line Units-of-production Double-declining-balance

Year 1 $ 7,400 $8,325 $16,800

Year 2 $ 7,400 $10,175 $10,080

Year 3 $ 7,400 $8,325 $6,048

Year 4 $ 7,400 $8,325 $3,629

Year 5 $ 7,400 $1,850 $2,177

Straight Line Method will result in the highest Net Income. This is because it provides for the lowest charge of depreciation expense

Explanation:

Straight-line

Straight line method charges the same amount of depreciation (fixed on cost) over the useful life of an asset.

Depreciation Charge = (Cost - Residual Value) ÷ Estimated Useful Life

= ($42,000 - $5,000) ÷ 5

= $ 7,400

Annual Straight line Depreciation Charge

Year 1 = $ 7,400

Year 2 = $ 7,400

Year 3 = $ 7,400

Year 4 = $ 7,400

Year 5 = $ 7,400

Units of Production

Depreciation Charge = (Cost - Residual Value) / Total Expected Production × Period`s Production

Therefore,

Depreciation Charge = Rate of depreciation × Period`s Production

then,

Rate of depreciation = ($42,000 - $5,000) / 20,000 units

= $1.85 per unit of production

Annual Units of Production Deprecation Charge

Year 1 = 4,500 units × $1.85 = $8,325

Year 2 = 5,500 units × $1.85 = $10,175

Year 3 = 4,500 units × $1.85 = $8,325

Year 4 = 4,500 units × $1.85 = $8,325

Year 5 = 1,000 units × $1.85 = $1,850

Double-declining-balance.

Depreciation Expense = 2 × SLDP × BVSLDP

Where,

SLDP = 100 ÷ Number of useful life

= 100 ÷ 5

= 20 %

Annual Double-declining-balance Expense

Year 1 = 2 × 20% × $42,000

= $16,800

Year 2 = 2 × 20% × ($42,000 - $16,800)

= $10,080

Year 3 = 2 × 20% × ($42,000 - $16,800 - $10,080)

= $6,048

Year 4 = 2 × 20% × ($42,000 - $16,800 - $10,080 - $6,048)

= $3,629

Year 5 = 2 × 20% × ($42,000 - $16,800 - $10,080 - $6,048- $3,629)

= $2,177

Answer from: Quest

it id the first and last option

Answer from: Quest

a) both were commissioned explorers

Another question on Business

Business, 22.06.2019 07:20

Richardson hired j.c. flood company, a plumbing contractor, to correct a stoppage in the sewer line of her house. the plumbing company's 'snake' device, used to clear the line leading to the main sewer, became caught in the underground line. to release it, the company excavated a portion of the sewer line in richardson's backyard. in the process, the company discovered numerous leaks in a rusty, defective water pipe that ran parallel with the sewer line. to meet public regulations, the water pipe, of a type no longer approved for such service, had to be replaced either then or later, when the yard would have to be excavated again. the plumbing company proceeded to repair the water pipe. though richardson inspected the company's work daily and did not express any objection to the extra work involved in replacing the water pipe, she refused to pay any part of the total bill after the company completed the entire operation. j.c. flood company then sued richardson for the costs of labor and material it had furnished. (c) for what, if anything, should richardson be liable? explain."

Answers: 1

Answer

Business, 22.06.2019 08:50

Suppose that in an economy the structural unemployment rate is 2.2 percent, the natural unemployment rate is 5.3 percent, and the cyclical unemployment rate is 2 percent. the frictional unemployment rate is percent and the actual unemployment rate (in this economy) is percent.

Answers: 2

Answer

Business, 22.06.2019 09:00

Your grandmother told you a dollar doesn't go as far as it used to. she says the purchasing power of a dollar is much lesser than it used to be. explain what she means. try and use and explain terms like inflation and deflation in your answer.

Answers: 1

Answer

Business, 22.06.2019 13:40

Determine if the following statements are true or false. an increase in government spending can crowd out private investment. an improvement in the budget balance increases the demand for financial capital. an increase in private consumption may crowd out private investment. lower interest rates can lead to private investment being crowded out. a trade balance in sur+ increases the supply of financial capital. if private savings is equal to private investment, then there is neither a budget sur+ nor a budget deficit.

Answers: 1

Answer

You know the right answer?

Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $42,000. Th...

Questions