Units of production depreciation method

Assignment Help Financial Management

Reference no: EM13728185

Oil Company may calculate depreciation using the “units of production” method of depreciation. Consider a depreciable asset costing $100,000 that is expected to have a useful life of 120,000 units. Salvage value is estimated to be $20,000. Estimated annual production for the next seven years is 30,000, 30,000, 20,000, and 10,000 per year in each of the remaining four years. Determine the depreciation each year using the “units of production” depreciation method.

Reference no: EM13728185

Questions Cloud

Two different bonds currently outstanding : The Smith Company has two different bonds currently outstanding. Bond A has a face value of $30,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $800 every six months over the subsequent eight years, and fina..

Economic-industry-company and financial analysis : Among the forms of fundamental analysis (economic, industry, company and financial analysis), which type of data do you think is the least reliable, the least relevant to most investors, and the most difficult to acquire?

What is the payback period for each project : What is the payback period for each project? Project A year (0) -500, year (1) 100, year (2) 200, year (3) 200, year (4) 400. Project B, year (0) -500, year (1) 400, year (2) 300, year (3) 200, year (4) 100.

Calculate the declining-balance depreciation : Oil Company has purchased production facilities for $2 million and has put them into service. Calculate the declining-balance depreciation (200% declining balance) for a five-year depreciation life.

Units of production depreciation method : Oil Company may calculate depreciation using the “units of production” method of depreciation. Consider a depreciable asset costing $100,000 that is expected to have a useful life of 120,000 units. Salvage value is estimated to be $20,000. Estimated ..

What would be your total return on the investment : You bought a 7 percent coupon bond one year ago for $1,080.50. These bonds make annual payments and mature six years from now. Suppose you decide to sell your bond today when the required rate of return on the bond is 5.5%.If the inflation rate was 3..

Information summarizes charge and cost data : Assume that Dr. Jones’ patients pay an average 80 percent of charges. Also assume cost to charge ratios of 0.90 in Nursing, 0.80 in Lab, 0.50 in Pharmacy, and 0.70 in Radiology. What is the total profit earned on Dr. Jones’ patients?

Mutual life insurance has a risk-based capital ratio : Ashley is an actuary who is employed by the Nebraska Department of Insurance. Her duties include monitoring the financial position of insurance companies doing business in Nebraska. Based on an analysis of annual financial statements that insurers ar..

Weight of debt and common equity by the current market value : Compute the weighted-average cost of capital (WACC) for the chosen firm on your spreadsheet. Take this number out to the nearest hundredth of a percent (e.g. 33.33%). There is no preferred stock in the company. Determine the weight of debt and common..

User Account

All Pages