Quiz 3

profilejriald

Show calculations that support all your answers.

 

 

Norwalk Hospital bought a new state of the art x-ray machine at the beginning of the year at a cost of $140,000.  Transportation and installation costs to get the machine delivered and functioning in the hospital’s radiology department amounted to $20,000.  The equipment’s estimated useful life is 3 years and the residual or salvage value is $10,000.

 

 

#1.   

 

a.)    Straight-Line Method    (24 points)  

Using the Straight Line Method, calculate the Depreciation Expense and Book Value of the x-ray machine that would be recorded at the end of each of the 3 years of its useful life.  Provide your answers and show your work in the table below.

 

 

Year

Annual Depreciation Computation

Annual Depreciation Expense

Accumulated

Depreciation

Book Value

1

 

 

 

 

2

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

b.)    Double Declining Balance Method    (24 points)

Using the Double Declining Balance Method, calculate the Depreciation Expense and Book Value of the x-ray machine that would be recorded at the end of each of the 3 years of its useful life. Provide your answers and show your work in the table below.

 

 

 

Year

Annual Depreciation Computation

Annual Depreciation Expense

Accumulated

Depreciation

Book Value

1

 

 

 

 

2

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

c.)     Units of Production Method    (24 points)

Using the Units of Production Method, calculate the Depreciation Expense and Book Value of the x-ray machine that would be recorded in each of the 3 years of its useful life.  

The estimated x-rays expected from the equipment over its useful life is 30,000.

The actual number of x-rays expected each year is:

Year 1               5,000 units

Year 2             15,000 units

Year 3             10,000 units

Provide your answers and show your work in the table below.

 

 

Year

Annual Depreciation Computation

Annual Depreciation Expense

Accumulated

Depreciation

Book Value

1

 

 

 

 

2

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

#2.   (14 points)  

Using which of these three depreciation methods will the hospital show the largest net income (profit) on their income statement for the second year (only for year #2, not years 1 and 2 combined).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

#3.   (14 points)    

Calculate the gain or loss for all of the 3 depreciation methods if the hospital sells the x-ray machine at the end of the second year for $65,000.  (Show your 3 answers and calculations below.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    • 6 years ago
    • 15
    Answer(2)

    Purchase the answer to view it

    blurred-text
    NOT RATED

    Purchase the answer to view it

    blurred-text
    NOT RATED
    • attachment
      depreciation.docx