Carousel, Inc purchased machinery at the beginning of 2014 for $43,000. In addit
ID: 2459905 • Letter: C
Question
Carousel, Inc purchased machinery at the beginning of 2014 for $43,000. In addition, Carousel paid $800 for an estimated delivery of the machinery to its plant and $1,200 for installation of the machinery. The machinery has an estimated residual value of $3,000 and an estimated life of 6 years or an estimated 30,000 hours of total production. The total amount of the asset's cost which will be allocated to expense over the asset's life under any depreciation method is: If the straight-line depreciation method is used, the asset's book value at the end of 2014 is: If the units-of-production depreciation method is used and the machinery was operated for 9.000 hours, depreciation expense for 2014 is: If the double declining method is used, determine the following for 2014: The double declining balance depreciation rate: The annual depreciation expense (round to the nearest dollar):Explanation / Answer
Answer-1 Particulars Amount in $ purchase cost of machinary 43000 delivery charge 800 installation 1200 Total cost 45000 less -salvage value 3000 Total amount of assets cost need to be allocated to expenses over the assets life under any depreciation method ( Depreciable cost) 42000 Answer-2 Particulars Amount in $ Total cost 45000 Less depreciation( ( total cost-salvage value)/number of year) 7000 Book value at the end of 2014 38000 Answer-3 Particulars Amount in $ Total cost 45000 salvage value 3000 total estimated hour 30000 depreciaton per hour 1.4 depreciation expenses if 9000 hour used 12600 Answer-4 (a) Double declining balance depreciation rate 100% / 6 years x 2 33.33% Answer-4 (b) Annual depreciation expenses Amount in $ 1st year- annual depreciation ($45000*33.33%) 14998.5 2nd year- annual depreciation (45000-14998.5)*33.33% 10000.5 3rd year- Annual depreciation ( 45000-14998.5-10000.5)*33.33% 6667.0 4th year 4444.7 5th year 2963.1 6th year 1975.4