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Hohnberger Enterprises purchased equipment on March 15, 2015, for $94,800....

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Question;1.;Hohnberger Enterprises;purchased equipment on March 15, 2015, for $94,800. The company also paid the;following amounts: $720 for freight charges, $240 for insurance while the;equipment was in transit, $1,320 for a one-year insurance policy, $2,110 to;train employees to use the new equipment, and $1,920 for testing and;installation. The equipment was ready for use on April 1, but the company did;not start using it until May 1.;Hohnberger has estimated;the equipment will have a 10-year useful life with no residual value. It;expects to consume the equipment?s future economic benefits evenly over the;useful life. The company has a December 31 year end.;a) Calculate the cost of;the equipment.;b) When should the;company begin depreciating the equipment: March 15, April 1, or May 1?;c);Which depreciation method should the;company use? (Straight line, units of production method, or diminishing;decline?);d) Using the method;chosen in (c), calculate the depreciation on the equipment for 2015;2.;Nissong Ltd. purchased a;new extraction device on April 4, 2012, at a cost of $165,600. The company;estimated that the extraction device would have a residual value of $16,320.;The extraction device is expected to be used for 9,800 working hours during its;four-year life. Actual extraction device usage was 570 hours in 2012, 2,450;hours in 2013, 2,960 hours in 2014, 2,660 hours in 2015, and 1,160 hours in;2016. Nissong has a December 31 year end.;Calculate depreciation;expense for years 2012, 2013, 2014, 2015, 2016 for the extraction device under;each of the following methods;(1) Straight-line method.;(2) Diminishing-balance using;double the straight-line rate method.;(3) Units-of-production method;Which method results in;the highest depreciation expense over the life of the asset? Highest profit?;Highest cash flow? (Straight line method, diminishing balance method, units of;production method, or all three methods?);3.;At the;beginning of 2015, Lindy Weink, the controller of Lafreni?re Inc., reviewed the;expected useful life and residual value of two of the company?s machines and;proposed changes as follows;Useful Life (in years);Residual Value;Machine;Date Acquired;Cost;Original;Proposed;Original;Proposed;#1;Jan. 1, 2005;$771,700;20;25;$40,700;$60,430;#2;Jan. 1, 2013;$117,700;5;4;$5,380;$3,300;a) Calculate the annual;depreciation for each asset using the straight-line method and the original;useful life and residual value;Machine;1 annual depreciation;Machine;2 annual depreciation;b) Calculate the;accumulated depreciation and carrying amount of each asset on December 31, 2014

 

Paper#37786 | Written in 18-Jul-2015

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