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12 X 13
(b) Sum-of-the-Years-Digits = = 78
2
100%
(c) Double-Declining Balance method X 2 = 16.67%
12
depreciation rate.
(c) $300,000 25,000 hours = $12.00 per hr.; 2,650 hrs. X $12.00 = $31,800
n(n + 1) 10(11) = 55
(d) 10 + 9 + 8 + 7 + 6 + 5 + 4 + 3 + 2 + 1 = 55 OR =
2 2
10
X $300,000 X 1/3 = $18,182
55
9
X $300,000 X 2/3 = 32,727
55
Total for 2015 $50,909
(e) $315,000 X 20% X 1/3 = $21,000
Depreciation Expense......................................................4,100
Accumulated DepreciationMachinery................ 4,100
Cost $9,000,000
Less: Accumulated depreciation 1,000,000
Carrying amount 8,000,000
Less: Fair value 4,800,000
Loss on impairment $3,200,000
(b) December 31, 2015
Depreciation Expense......................................................
1,200,000
Accumulated DepreciationEquipment............... 1,200,000
$84,000
(a) Depreciation Expense: = $2,800 per year
30 years
Note: The spraying costs as well as the costs to maintain the fire lanes and roads are
expensed each period and are not part of the depletion base.
(c) The asset turnover times the profit margin on sales provides the rate of return
on assets computed for Tootsie Roll as follows:
Note the answer 5.12% is the same as the rate of return on assets computed in
(b) above.