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# DEPRECIATION

PROBLEM - 01 In recent years, Juresic Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant selected the depreciation method for each bus, and various methods were selected. Information concerning the buses is summarized below. Salvage Useful Life Bus Acquire C!s" #alue i\$ %ears De&recia"i!\$ Me"'! 1 1 1 !" # \$%,!!! # %,!!! & 'traight(line ) 1 1 !" 1)!,!!! 1!,!!! * +eclining(balance , 1 1 !\$ "!,!!! ",!!! & -nits(of(activity .or the declining(balance method, the company uses the double(declining rate. .or the units(of(activity method, total miles are e/pected to be 1)!,!!!. 0ctual miles of use in the first , years were1 )!!\$, )*,!!!2 )!1!, ,*,!!!2 and )!11, ,!,!!!. Instructions 3a4 5ompute the amount of accumulated depreciation on each bus at +ecember ,1, )!1!. 3b4 If bus no. ) was purchased on 0pril 1 instead of January 1, what is the depreciation e/pense for this bus in 314 )!!" and 3)4 )!!\$6 PROBLEM ( 0) 7n January 1, )!1!, 8ele 5ompany purchased a machine for use in its production process. The recorded cost of this machine was #1%!,!!!. 8ele estimates that the useful life of the machine is * years with a #1!,!!! salvage value remaining at the end of that time period. 314 5alculate the amount of depreciation e/pense that 8ele should record for the machine each year of its useful life under the following assumptions. 314 8ele uses the straight(line method of depreciation. 3)4 8ele uses the declining(balance method. The rate used is twice the straight(line rate. 3,4 8ele uses the units(of(activity method and estimates that the useful life of the machine is 1)&,!!! units. 0ctual usage is as follows1 )!1!, *&,!!! units2 )!11, ,&,!!! units2 )!1), )&,!!! units2 )!1,, )!,!!! units. 3)4 9hich method used to calculate depreciation on machine B reports the highest amount of depreciation e/pense in year 1 3)!1!46 The highest amount in year * 3)!1,46 The highest total amount over the *(year period6 PROBLEM - 0* In recent years, 8ablo 5ompany purchased three machines. Because of heavy turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and each selected a different method. Information concerning the machines is summarized below. Salvage Useful Life De&recia"i!\$ Mac'i\$e Acquire C!s" #alue i\$ %ears Me"'! 1 1 1 !: #1!&,!!! # &,!!! 1! 'traight(line ) 1 1 !" 1&!,!!! 1!,!!! " +eclining(balance , 11 1 1! 1!!,!!! 1&,!!! % -nits(of(activity .or the declining(balance method, the company uses the double(declining rate. .or the units(of(activity method, total machine hours are e/pected to be )&,!!!. 0ctual hours of use in the first , years were1 )!1!, ),!!!2 )!11, *,&!!2 and )!1), &,&!!. I\$s"ruc"i!\$s 3a4 5ompute the amount of accumulated depreciation on each machine at +ecember ,1, )!1!. 3b4 If machine ) had been purchased on ;ay 1 instead of January 1, what would be the depreciation e/pense for this machine in 314 )!!" and 3)4 )!!\$6

PROBLEM ( 0+ 7n January 1, )!1!, 0rlo 5ompany purchased a machine for use in its production process. The recorded cost of this machine was #1!!,!!!. 0rlo estimates that the useful life of the machine is * years with a #1!,!!! salvage value remaining at the end of that time period. 3a4 5alculate the amount of depreciation e/pense that 0rlo should record for the machine each year of its useful life under the following assumption. 314 0rlo uses the straight(line method of depreciation. 3)4 0rlo uses the declining(balance method.The rate used is twice the straight(line rate. 3,4 0rlo uses the units(of(activity method and estimates the useful life of the machine is )&,!!! units. 0ctual usage is as follows1 )!1!, &,&!! units2 )!11, :,!!! units2 )!1),",!!! units2 )!1,, *,&!! units.

3b4 9hich method used to calculate depreciation on the machine reports the lowest amount of depreciation e/pense in year 1 3)!1!46 The lowest amount in year * 3)!1,46 The lowest total amount over the *(year period6