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ACC121Assessment-Comp Prob2-set2-w-s2016

ACC121Assessment-Comp Prob2-set2-w-s2016 ou will work on this problem on your own time. When completed your work will be submitted to your instructor through an Assignment Link provided in the Weekly Folder for Seminar 6. Problem: The Pablo Paving Company purchased a new bulldozer for $ 250,500 at the beginning of Year 1. It is estimated that the residual value will be 25,000 and have a useful life of 6 years. The Bulldozer is expected to last 10,000 hours. In year 1 it was used 1,800 hours, in year 2 it was used 2000 hours; year 3, 2,500 hours; 1,500 hours in year 4; 1,200 hours in year 5; and 1,000 hours in year 6. Required: 1) Compute the annual depreciation and carrying value for the new crane for each of the 6 years under each of the following methods: a) Straight-line, b) production, c) double declining- balance. Round percentage to 2 decimal places (for example, like this: 22.22 %). 2) If the crane is sold for $ 250,000 at the end of year 3, what is the gain/loss under each of the three methods? 3) How does each method affect the firm’s profitability? Please explain this as clearly as possible. For requirement 1, set up the problem like this: Method of Depreciation: a) Straight line _________ Depreciable amount: ________________________ Year    Annual Depreciation Expense                        Annual Depreciation Expense         carrying value 1         ______________________________           _______________                     ____________ 2       ______________________________             _______________                              ____________ 3       ______________________________             _______________                     ____________ 4       ______________________________             _______________                     ____________ 5       ______________________________           _______________                    ____________ 6       ______________________________           _______________                     ____________           Method of Depreciation _b) Production Method______                                           page 2 of 2 Depreciable amount______________________ Year                Annual Depreciation                 Accumulated Depreciation                   Carrying Value 1                     _____________________         ______________________                 ____________ 2                    _____________________         ______________________                 _____________ 3                     _____________________         ______________________                 _____________ 4                     _____________________          ______________________                 _____________ 5                     _____________________           ______________________               ______________ 6                     _____________________           ______________________               ______________ Method of Depreciation _c) _Double Declining Balance Depreciable amount _______________________ Year                  Annual Depreciation               Accumulated Depreciation                 Carrying Value 1                         _____________________         _______________________               ______________ 2                       _____________________         _______________________             ______________ 3                     ______________________         _______________________              ______________ 4                     ______________________         _______________________             ______________ 5                     ______________________         _______________________             ______________ 6                      ______________________         ______________________               ______________ For requirement 2, set up the problem like this: Year 3       Accumulated Depreciation           Carrying Value         Selling Price       Gain/Loss Method a)        _________________           ____________         __________       ________ Method b) _____________________           ____________         __________       _________ Method c) _____________________           ____________         ___________     _________ Item 3) ____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________]]>

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