Identify the depreciation method that meets

Assignment Help Accounting Basics

Reference no: EM131003958

On January 2, 20X1, Machinery Unlimited purchased a second-hand trailer at a cost of €63 000. Before placing the trailer in service, the company spent €2200 painting it, €800 replacing tyres, and €4000 overhauling the chassis. Machinery Unlimited management estimates that the trailer will remain in service for six years and have a residual value of €14 200. The trailer's annual mileage is expected to be 18 000 miles in each of the first four years and 14 000 miles in each of the next two years. In deciding which depreciation method to use, Brett Coombs, the general manager, requests a depreciation schedule for each of the following depreciation methods: (a) straight-line and (b) depletion.

You are asked to:

(a) Prepare a depreciation schedule (i.e. for the six year period) for each depreciation method, showing asset cost, depreciation expense, and asset book value.

(b) For income tax purposes, the company wishes to use the depreciation method that minimizes income tax payments in the early years of as- set use. Identify the depreciation method that meets this requirement.

Reference no: EM131003958

Questions Cloud

Draw demand and supply curves in the diagram for suvs : The increasing popularity of sports utility vehicles, SUVs, has led auto dealers to keep a large quantity of them in stock.With the increase in the price of gasoline, however, demand has been falling. Draw demand and supply curves in the diagram f..

Effects of impairment test for accounting period : Required: What are the accounting effects of this impairment test for accounting period 20X6?

Requirements for provision accounting : Critically assess the following cases within the context of the IAS 37 requirements for provision accounting. (a) Company A offers a one year warranty for the products that it manufactures. Yearly revenue subject to product warranties amounts to €3..

Draw a supply curve for ice cream before the price increase : The major ingredients in ice cream are dairy products derived from milk.This summer the price of milk is ex- pected to rise significantly. Draw a supply curve for ice cream before the price increase in milk is known. Draw a supply curve for ice cr..

Identify the depreciation method that meets : For income tax purposes, the company wishes to use the depreciation method that minimizes income tax payments in the early years of as- set use. Identify the depreciation method that meets this requirement.

What happens to quantity demanded and quantity supplied : The minimum wage is a price floor in a mar- ket for labor.The government sets a minimum price per hour of labor in certain markets, and no employer is per- mitted to pay a wage lower than that. Go to the Depart- ment of Labor's minimum wage Web pa..

Asset value of the new machinery : Which of the above items should be part of the asset value of the new machinery?

Plot each student demand curve : Make up a chart listing a variety of prices per gallon of gasoline-$1.00, $1.25, $1.50, $1.75, $2.00, $2.25. Ask each stu- dent-and yourself-how many gallons per week they would purchase at each possible price.Then plot each student's demand curve...

Consider the use of stereotypes in various forms of media : To prepare: Review this week's Learning Resources. Consider the use of stereotypes in various forms of media. Think about how stereotypes elicit emotional responses from the audience

User Account

All Pages