Questions -
1. On June 1, 2002, Duncan Inc. purchased equipment for $65,000. The equipment had an estimated life of 10 years, an estimated salvage value of $5,000, and was expected to be used to produce 150,000 units over its life. During 2002, the equipment was used to produce 9,000 units and during 2003 it was used to produce 17,000 units. Assume the company employs the units of production method of depreciation. Calculate the amount of accumulated depreciation on the equipment shown in the company's December 31, 2003 balance sheet. Do not use decimals in your answer.
2. On January 1, 2003, ABC, Inc. purchased equipment for $80,000. The equipment had an estimated useful life of 10 years and an estimated salvage value of $3,000. ABC, Inc. will depreciate the equipment using the double-declining balance method of depreciation. Calculate the amount of depreciation expense recorded on the equipment for 2005. Do not use decimals in your answer.
3. Payne Company purchased a new machine on January 1, 2005 for $678,000. The machine was assigned a 10-year life and a salvage value of $18,000. Payne Company will depreciate the machine using the sum-of-the-years'-digits depreciation method. Calculate the book value of the machine at December 31, 2007. Do not use decimals in your answer.
4. Mason Company purchased a new machine on January 1, 1999, for $64,000. At the time of acquisition, the machine was estimated to have a service life of eight years and a salvage value of $10,000. The company uses the double-declining balance method of calculating depreciation. Assume that the machine was sold for $39,000 cash on December 31, 2001. Calculate the gain recorded on the sale. Do not use decimals in your answer or type the word gain after your answer.
5. On June 1, 2004, XYZ Company paid $360,000 to purchase land, building, and equipment. The market value of these assets on that date were: land $90,000; building $260,000; equipment $50,000. Before the facilities could be used, XYZ Company had to spend $4,000 to put the equipment in working order and $15,000 to renovate the building. The building was then estimated to have a useful life of 20 years with a $3,000 salvage value. The building will be depreciated using the straight-line method. Calculate the book value of the building at December 31, 2006. Do not use decimals in your answer.
6. On January 1, 2002, ABC Company purchased equipment for $100,000. The equipment was assigned an estimated life of 10 years and a residual value of $10,000. On January 1, 2005, ABC Company decided the life of the equipment should be revised from 10 to 15 years. Calculate the depreciation expense recorded on the equipment for 2005 assuming ABC Company uses the straight line depreciation method. Do not use decimals in your answer.