AC 302 CHAPTER 11 PROBLEM QUESTION 1

AC 302 CHAPTER 11 PROBLEM QUESTION 1
Name				Date		
Instructor			Course		
Intermediate Accounting 14th Edition by Kieso Weygandt and Warfield						
Primer on Using Excel in Accounting by Rex A Schildhouse						
						
P11-1 (Depreciation for Partial Period—SL, SYD, and DDB) Alladin Company purchased Machine #201 on May 1, 2012. The following information relating to Machine #201 was gathered at the end of May.						
						
						
	Price				$85,000 	
	Credit terms				2 / 10, N / 30	
	Freight-in costs				$800 	
	Prep and installation costs				$3,800 	
	Labor costs during regular production operations				$10,500 	
						
It was expected that the machine could be used for				10 	years, after which the salvage	
value would be	$0 	Alladin intends to use the machine only			8 	years, however,
after which it expects to be able to sell it for			$1,500 	The invoice for Machine #201 was paid		
May 5, 2012. Alladin uses the calendar year as the basis for the preparation of financial statements.						
						
Instructions:						
"(a) (1) Compute the depreciation expense for the years indicated using the straight-line method for
          2012.  (Round to the nearest dollar.)"						
						
						
Total Cost =	Price		Amount			
	Less: Credit terms		Amount			
	Freight-in costs		Amount			
	Prep and installation costs		Amount			
			Formula			
	Salvage value		Amount			
	Total Cost =		Formula			
	Depreciable value		Formula			
	Life of the asset		Number			
	Annual depreciation exp		Formula			
	Partial year depreciation		Formula	8 of 12 months of 2012		
						
"(a) (2) Compute the depreciation expense for the years indicated using the sum-of-years'-digits method
          for 2013. (Round to the nearest dollar.)
          Utilize the Excel formula =SYD(Cost,Salvage,Life,Period)."						
(Round to the nearest dollar.)						
						
		Formula	Formula	for last 4 of 12 months of first year		
		Formula	Formula	for first 8 of 12 months of second year		
			Formula	Total for second calendar year		
						
"(a) (3) Compute the depreciation expense for the years indicated using the double-declining balance
           method for 2012. (Round to the nearest dollar.)
          Utilize the Excel formula =DDB(Cost,Salvage,Life,Period)."						
(Round to the nearest dollar.)						
						
		Formula	Formula	for last 8 of 12 months of first year		
						
"(b) Suppose Kate Crow, the president of Alladin, tells you that because the company is a new
     organization, she expects it will be several years before production and sales reach optimum
     levels. She asks you to recommend a depreciation method that will allocate less of the company-
     depreciation expense to the early years and more to later years of the assets’ lives. What method
     would you recommend?"						
						
						
						
						
Enter text answer here.