AC 302 CHAPTER 11 QUESTION 2

AC 302 CHAPTER 11 QUESTION 2
Name				Date		
Instructor				Course		
Intermediate Accounting 14th Edition by Kieso Weygandt  and Warfield						
Primer on Using Excel in Accounting by Rex A Schildhouse						
						
E11-2 (Depreciation—Conceptual Understanding) Hasselback Company acquired a plant asset at 						
the beginning of Year 1. The asset has an estimated service life of					5	years. An 
employee has prepared depreciation schedules for this asset using three different methods to compare the results of using one method with the results of using other methods. You are to assume that the following schedules have been correctly prepared for this asset using:						
						
						
(1) the straight-line method, 						
(2) the sum-of-the-years’-digits method, and 						
(3) the double-declining-balance method.						
	Year	Straight-Line	Sum-of-Years'-Digits	Double-Declining-Balance		
						
						
	1	$9,000 	$15,000 	$20,000 		
	2	9,000 	12,000 	12,000 		
	3	9,000 	9,000 	7,200 		
	4	9,000 	6,000 	4,320 		
	5	9,000 	3,000 	1,480 		
	Total	$45,000 	$45,000 	$45,000 		
						
Instructions:						
Answer the following questions.						
(a) What is the cost of the asset being depreciated?						
						
Enter answer here.						
						
						
						
Area for formulas as desired.						
Area for formulas as desired.						
Area for formulas as desired.						
						
(b) What amount, if any, was used in the depreciation calculations for the salvage value for this asset?						
						
Enter answer here.						
						
						
						
(c) Which method will produce the highest charge to income in Year 1?						
						
Enter answer here.						
						
						
						
(d) Which method will produce the highest charge to income in Year 4?						
						
Enter answer here.						
						
						
						
(e) Which method will produce the highest book value for the asset at the end of Year 3?						
						
Enter answer here.						
						
						
						
Computations:						
Area for formulas as desired.						
						
Area for formulas as desired.						
						
Area for formulas as desired.						
						
(f) If the asset is sold at the end of Year 3, which method would yield the highest gain (or lowest loss) on disposal of the asset?						
						
						
Enter answer here.