Level 2
Chapter 17 – Section I – Exercise 9
The Fluffy Laundromat purchased new washing machines and dryers for $57,000. Freight
charges were $470, and installation amounted to $500. The machines are expected
to last 5 years and have a residual value of $2,000. If Fluffy elects to use the straight –
line method of depreciation, prepare a depreciation schedule for these machines.
Original cost = $57,000.00
Fluffy Laundry
Depreciation Schedule
Straight-Line Method
End of
Year
Annual
Depreciation
Accumulated
Depreciation
Book Value
$57,970.00 (new)
1$11,194.00 $11,194.00 46,776.00
Copyright © 2017 Cengage Learning
Level 2
Chapter 17 – Section I – Exercise 17
Vanguard Manufacturing, Inc., purchased production-line machinery for $445,000. It is
expected to last for 6 years and have a trade-in value of $25,000. Using the sum-of-
the-years’ digits method, prepare a depreciation schedule for Vanguard.
Original cost = $445,000.00
Vanguard Manufacturing, Inc.
Machinery – SYD Depreciation Schedule
End of
Year
Total
Depreciation
Annual
Depreciation
Accumulated
Depreciation
Book Value
$445,000.00 (new)
Level 2
Chapter 17 – Section I – Exercise 24
A Snap-On Tools franchise bought a fleet of new trucks for $180,000. The fleet is ex-
pected to have an 8-year useful life and a trade-in value of $35,000. Prepare a depre-
ciation schedule by using the 150% declining-balance method for the trucks.
Beginning book value = $180,000.00
Snap-On Tools
Depreciation Schedule–Truck Fleet
8-year, 150% declining-balance
End of
Year
Beginning Book
Value
Depreciation
Rate
Depreciation for
the Year *
Accumulated
Depreciation
Ending Book
Balance
$180,000.00 (new)
1 $180,000.00 18.75% $33,750.00 $33,750.00 146,250.00
Level 3
Chapter 17 – Section I – Exercise 31
Thunderbird Manufacturing purchased a new stamping maching for $45,000 with a salvage
value of $5,000. For depreciation purposes, the machine is expected to have a useful life
of 250,000 units of production. The number of units the machine is estimated to produce
each year for the next five years are 50,000, 70,000, 45,000, 66,000, and 30,000 for years
1 through 5 respectively. Create a depreciation schedule for the stamping machine using
the units-of-production method.
End of
Year
Depreciation
per Unit
Units
Produced
Annual
Depreciation
Accumulated
Depreciation
Book value
Thunderbird Manufacturing, Inc.
Depreciation Schedule, Units-of-Production
Stamping Machine — 250,000 Units
Level 3
Chapter 17 – Section I – Exercise 32
You are the accountant for Raleigh Industries, a manufacturer of plastic gears for
electric motors. The company’s production facility in Pittsburgh has a cost of
$3,800,000, an estimated residual value of $400,000, and an estimated useful life
of 40 years. You are using the straight-line method of depreciation for this asset.
a. What is the amount of the annual depreciation?
Cost = $3,800,000
b. What is the book value of the property at the end of the twentieth year of use?
c. If at the start of the twenty-first year you revise your estimate so that the re-
maining useful life is 15 years and the residual value is $120,000, what should be
the depreciation expense for each of the remaining 15 years?
Level 2
Chapter 17 – Section II – Exercise 7
Sequoia Timber Company purchased land containing an estimated 6,500,000
board feet of lumber for $3,700,000. The company invested another $300,000 to
construct access roads and a company depot. The residual value of the property
and equipment is estimated to be $880,000.
a. What is the average depletion cost per board foot of lumber?
Total cost = $3,700,000.00
b. If 782,000 board feet were cut in the second year of operation, what is the amount of
the depletion cost for that year?
Level 2
Chapter 17 – Assessment Test – Exercise 1, 2
Calculate the total cost, total depreciation, and annual depreciation for the following
assets by using the straight-line method:
(Use the textbook for your input data)
Exercise #1
Exercise #2
Cost = $5,600.00 $16,900.00
Level 2
Chapter 17 – Assessment Test – Exercise 3
Oxford Manufacturing, Inc., purchased new equipment totaling $648,000. Freight
charges were $2,200, and installation amounted to $1,800. The equipment is expected
to last 4 years and have a residual value of $33,000. If the company elects to use the
straight-line method of depreciation, prepare a depreciation schedule for these assets.
Original cost = $648,000.00
Oxford Manufacturing, Inc.
Depreciation Schedule
Straight-line Method
End of
Year
Annual
Depreciation
Accumulated
Depreciation
Book Value
$652,000.00 (new)
Level 3
Chapter 17 – Assessment Test – Exercise 12
Screen Gems Movie Theater purchased a new projector for $155,000 with a salvage
value of $2,000. Delivery and installation amounted to $580. The projector is expected
to have a useful life of 15,000 hours. The estimated number of hours of use for the first
four years is 2300, 1890, 2160 and 2530 hours for years 1 through 4 respectively.
Complete the following depreciation schedule for the first 4 years of operation by using
the units-of-production method.
Note: Use Excel’s Round function to round the value for the depreciation per unit to the nearest cent.
Original cost = $155,000.00
Screen Gems Movie Theater
Depreciation Schedule, Units-of-Production
Projector – 15,000 Hours
End of
Year
Depreciation
per Hour
Hours
Annual
Depreciation
Accumulated
Depreciation
Book Value
Level 3
Chapter 17 – Assessment Test – Exercise 14
The Platinum Touch Mining Company paid $4,000,000 for a parcel of land, including the
mining rights. In addition, the company spent $564,700 to prepare the site for mining
operations. When mining is completed, it is estimated that the residual value of the
asset will be $800,000. Scientists estimate that the site contains 150,000 ounces of
platinum.
a. What is the average depletion cost per ounce (rounded to the nearest tenth of a cent)?
Total cost = $4,000,000.00
b. If 12,200 ounces were mined in the first year of operation, what is the amount of the
depletion cost?