Name: Date:
Instructor: Course:
for $315,000
10 $15,000 240,000
25,000
2,650 25,500
Amount
Amount
Amount
Amount
First part of 2015
Time period factor
Formula Formula
E11-4 (Depreciation Computations—Five Methods) Jon Seceda Corp. purchased machinery
on May 1, 2014. It is estimated that it will have a useful life of
years, salvage value of
, production of
units, and working hours of
. During 2015, Seceda Corp. uses the machinery for
(e) Declining balance, (10 year life, DDB results in 20% annual rate, use 200% for Factor in Excel).
(Note: Utilize Excel formula =DDB(Cost,Salvage,Life,Period,Factor) to solve the problem.
(Note: Second year covers two depreciation periods.)
First part of 2015
Time period factor
Cost:
Salvage value:
(c) Working hours (Note: Working hours is a “units-of-production” method and since units-of-
production has an “s” in it, utilize salvage value in computing period depreciation.)
(b) Units-of-output (Note: Since units-of-production has an “s” in it, utilize salvage value in computing
period depreciation.)
Cost:
Salvage value:
Instructions:
From the information given, compute the depreciation charge for 2015 under each of the following
methods. (Round to the nearest dollar.)
hours, and the machinery produces
units.
Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield
Name: Date:
Instructor: Course:
ch11.xlsx, Exercise 11-4, Page 13 of 21, 2/24/2023, 11:45 AM
Labor costs during regular production operations
Price
It was expected that the machine could be used for
years, after which the salvage
Alladin intends to use the m achine only
P11-1 (Depreciation for Partial Period—SL, SYD, and DDB) Alladin Company purchased Machine
#201 on May 1, 2014. The following information relating to Machine #201 was gathered at the end of
May.
Credit terms
Freight-in costs
Prep and installation costs
Solution
Intermediate Accounting, 15th Edition by Kieso, Weygandt, and W arfield
ch11.xlsx, Problem 11-1 Solution, Page 14 of 21, 2/24/2023, 11:45 AM
after which it expects to be able to sell it for
The invoice for Machine #201 was paid
May 5, 2014. Alladin uses the calendar year as the basis for the preparation of financial statements.
Solution
Intermediate Acco nting, 15th Editi b Ki W dt, d W fi ld
(b) Suppose Kate Crow, the president of Alladin, tells you that because the company is a new
organization, she expects it will be several years before production and sales reach optimum
levels. She asks you to recommend a depreciation method that will allocate less of the com pany’s
ch11.xlsx, Problem 11-1 Solution, Page 15 of 21, 2/24/2023, 11:45 AM
Name: Date:
Instructor: Course:
$85,000
2 / 10, N / 30
Total Cost = Amount
Amount
Amount
Amount
for first 8 of 12 months of second year
for last 8 of 12 months of first year
Formula Formula
Price
(a) (2) Compute the depreciation expense for the years indicated using the sum-of-years’-digits method
for 2015. (Round to the nearest dollar.)
Utilize the Excel formula =SYD(Cost,Salvage,Life,Period).
for last 4 of 12 months of first year
(a) (1) Compute the depreciation expense for the years indicated using the straight-line method for
2014. (Round to the nearest dollar.)
Instructions:
Prep and installation costs
Freight-in costs
Price
Less: Credit terms
P11-1 (Depreciation for Partial Period—SL, SYD, and DDB) Alladin Company purchased Machine #201
on May 1, 2014. The following information relating to Machine #201 was gathered at the end of May.
Credit terms
Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield
ch11.xlsx, Problem 11-1, Page 16 of 21, 2/24/2023, 11:45 AM
Labor costs during regular production operations
It was expected that the machine could be used for
years, after which the salvage
after which it expects to be able to sell it for
The invoice for Machine #201 was paid
May 5, 2014. Alladin uses the calendar year as the basis for the preparation of financial statements.
Freight-in costs
Prep and installation costs
Name: Date:
Instructor: Course:
th
(b) Suppose Kate Crow, the president of Alladin, tells you that because the company is a new
organization, she expects it will be several years before production and sales reach optimum
levels. She asks you to recommend a depreciation method that will allocate less of the company’s
ch11.xlsx, Problem 11-1, Page 17 of 21, 2/24/2023, 11:45 AM
(3) Sum-of-years’-digits, and
(4) Units-of-output.
For tax purposes, the class life is
years. Use the MACRS tables for c
omputing depreciation.
Name: Date:
Instructor: Course:
$1,260,000
(1) Straight-line: $1,260,000
60,000
1,200,000
5
$240,000
Depreciation
Expense
Accumulated
Depreciation
2014
2015
2013
Depreciation
Expense
Accumulated
Depreciation
2014
2015
$504,000 $504,000
small machine-tool manufacturer, acquired for
a piece of new industrial
(2) Double-declining balance:
Year
2013
Year
Depreciable value
Life
Annual depreciation expense
Cost
Salvage value
Instructions:
(a) Which depreciation method would maximize net income for financial statement reporting for the
3-year period ending December 31, 2015? Prepare a schedule showing the amount of
accumulated depreciation at December 31, 2015, under the method selected. Ignore present
(1) Straight-line,
(2) Double-declining balance,
11-12 (Depreciation—SL, DDB, SYD, Act., and MACRS) On January 1, 2013, Locke Company, a
Solution
Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield
ch11.xlsx, Problem 11-12 Solution, Page 18 of 21, 2/24/2023, 11:45 AM
equipment. The new equipment had a useful life of
years, and the salvage value
was estimated to be
. Locke estimates that the new equipment can produce
machine tools in its first year. It estimates that production will decline by
units per year over the remaining useful life of the equipment.
The following depreciation methods may be used:
Name: Date:
Instructor: Course:
Solution
Depreciation
Expense
Accumulated
Depreciation
$400,000 $400,000
Year
Expected
Output
Depreciation
Expense
Accumulated
Depreciation
$1,260,000 2013 12,000 $288,000 $288,000
Total Cost
MACRS
Rates (%)
Depreciation
Expense
Accumulated
Depreciation
2015 1,260,000 × 17.49% = 220,374 709,002
$709,002
Total Cost
Accumulated
Depreciation
Optional straight-line method:
2013 1,260,000 × 14.29% = $180,054 $180,054
2013 1,260,000 × (1/7 X 1/2) = $90,000 $90,000
2014 1,260,000 × 1/7 = 180,000 270,000
2015 1,260,000 × 1/7 = 180,000 450,000
$450,000
The general MACRS method would have higher depreciation expense ($709,002) than that of the optional
(b) Which depreciation method (MACRS or optional straight-line) would minimize net income for
income tax reporting for the 3-year period ending December 31, 2015? Determine the amount of
accumulated depreciation at December 31, 2015. Ignore present value considerations.
General MACRS method: (Values taken from the MACRS rates schedule.)
(4) Units-of-output:
Cost
(3) Sum-of-the-years’-digits:
Year
2013
[(5/15) × $1,200,000]
2014
[(4/15) × $1,200,000]
2015
[(3/15) × $1,200,000]
Name: Date:
Instructor: Course:
$1,260,000
5
(1) Straight-line: Amount
Amount
Formula
Number
Formula
Depreciation
Expense
Accumulated
Depreciation
Formula Formula
Formula Formula
Depreciation
Accumulated
Formula Formula
Formula Formula
2014
2015
(2) Double-declining balance:
Year
2013
2014
2015
small machine-tool manufacturer, acquired for
a piece of new industrial
equipment. The new equipment had a useful life of
years, and the salvage value
Year
2013
Depreciable value
Life
Annual depreciation expense
Cost
Salvage value
Instructions:
(a) Which depreciation method would maximize net income for financial statement reporting for the
3-year period ending December 31, 2015? Prepare a schedule showing the amount of
accumulated depreciation at December 31, 2015, under the method selected. Ignore present
11-12 (Depreciation—SL, DDB, SYD, Act., and MACRS) On January 1, 2013, Locke Company, a
Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield
ch11.xlsx, Problem 11-12, Page 20 of 21, 2/24/2023, 11:45 AM
was estimated to be
. Locke estimates that the new equipment can produce
machine tools in its first year. It estimates that production will decline by
units per year over the remaining useful life of the equipment.
The following depreciation methods may be used:
(3) Sum-of-years’-digits, and
(4) Units-of-output.
For tax purposes, the class life is
years. Use the MACRS tables for c
omputing depreciation.
(1) Straight-line,
(2) Double-declining balance,
Name: Date:
Instructor: Course:
th
Depreciation
Expense
Accumulated
Depreciation
Formula Formula
Year
Expected
Output
Depreciation
Expense
Accumulated
Depreciation
Amount 2013 Formula Formula Formula
Amount 2014 Formula Formula Formula
Total Cost
MACRS
Rates (%)
Depreciation
Expense
Accumulated
Depreciation
2013 1,260,000 × Percentage = Formula Formula
2014 1,260,000 × Percentage = Formula Formula
Total Cost
Depreciation
Rate
Annual
Depreciation
Accumulated
Depreciation
2013 1,260,000 × Rate = Formula Formula
2014 1,260,000 × Rate = Formula Formula
Optional straight-line method:
(b) Which depreciation method (MACRS or optional straight-line) would minimize net income for
income tax reporting for the 3-year period ending December 31, 2015? Determine the amount of
accumulated depreciation at December 31, 2015. Ignore present value considerations.
General MACRS method: (Values taken from the MACRS rates schedule.)
(4) Units-of-output:
Cost
Salvage value
(3) Sum-of-the-years’-digits:
Year
2013
Formula Formula
2014
2015