Reference no: EM131581892
Problem - The following information is available for Chasen Company, which has an accounting year-end of December 31, 2014.
1. A delivery truck was purchased on June 1, 2011, for $60,000. It was estimated to have an $6,000 salvage value. It is estimated to have a useful life is 5 years, and an estimated total use of 120,000 miles. During 2014, the truck was driven 20,000 miles. At the end of 2014, the truck had not exceeded its total estimated use. The units-of-activity method of depreciation is being used.
2. Land was purchased on September 1, 2014 for $260,000. Because the land is located on a decommissioned military base, and is contaminated with chemicals and pollution, its estimated use life is only 20 years. Chasen Company would use the straight-line method of depreciation, if applicable.
3. A building was purchased on January 1, 2004, for $3,000,000. It was estimated to have a $60,000 salvage value at the end of its 30-year useful life. The straight-line method of depreciation is being used.
4. Manufacturing equipment was purchased on April 1, 2014, for $220,000. It was estimated to have a $24,000 salvage value. It is estimated to have a useful life of 8 years, and an estimated total use of 100,000 units. During 2014, the manufacturing equipment produced 12,000 units. At the end of 2011, the manufacturing equipment had not exceeded its total estimated use. The double-declining balance method of depreciation is being used.
Accumulated depreciation as of January 1, 2014 is as follows:
- Delivery truck: $41,400
- Land: $0 (because it was only purchased on September 1, 2014)
- Building: $2,058,000
- Manufacturing equipment: $0 (because it was purchased on April 1, 2014)
Questions: 1. For each asset, what is depreciation expense for the year ending December 31, 2014? (Make sure to list each asset separately.) (1 point per asset.)
2. What is the net book value of each fixed asset as of December 31, 2014? (Remember, net book value equals cost minus accumulated depreciation.) (Make sure to list each asset separately.)
SPECIFIC INSTRUCTIONS:
Round all answers to the nearest dollar. You must show all of your work for each question of this quiz. If you do not show your work, you will not receive any points for this quiz, even if you have the correct answer.
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