Question: 1) Boone Company purchased a piece of machinery by paying $5,000 cash. In addition to the purchase price, the company incurred $100 freight charges. The machine has an estimated useful life of 5 years and will require $125 insurance over that period. Boone expects the machine to have a salvage value of $600 at the end of its useful life. Boone uses straight-line depreciation.
How much should Boone Company record as the cost of the machine?
2) Boone Company purchased a piece of machinery by paying $5,000 cash. In addition to the purchase price, the company incurred $100 freight charges. The machine has an estimated useful life of 5 years and will require $125 insurance over that period. Boone expects the machine to have a salvage value of $600 at the end of its useful life. Boone uses straight-line depreciation.
What is the total amount of depreciation expense that Boone can take over the life of the asset?
3) Boone Company purchased a piece of machinery by paying $5,000 cash. In addition to the purchase price, the company incurred $100 freight charges. The machine has an estimated useful life of 5 years and will require $125 insurance over that period. Boone expects the machine to have a salvage value of $600 at the end of its useful life. Boone uses straight-line depreciation.
What is the depreciation expense for year 1?
4) Boone Company purchased a piece of machinery by paying $5,000 cash. In addition to the purchase price, the company incurred $100 freight charges. The machine has an estimated useful life of 5 years and will require $125 insurance over that period. Boone expects the machine to have a salvage value of $600 at the end of its useful life. Boone uses straight-line depreciation.
What is the book value of the machine at the end of year 2?
5) On January 1, 2013, Modern Designs purchases equipment at a cost of $6,300. The equipment will have an estimated useful life of 3 years or 30,000 hours. The equipment will have a $600 salvage value at the end of its life.
If Modern Designs uses straight-line depreciation, what is the depreciation expense for the year ending December 31, 2014?