Analyze the straight-line, units-of-production, double-declining-balance, and units-of-production depreciation / amortization methods Spectacular Condo Corp. purchased exercise...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Analyze the straight-line, units-of-production, double-declining-balance, and units-of-production depreciation / amortization methods Spectacular Condo Corp. purchased exercise equipment for its recreation room on January 1, 2016 for a cost of $60 000. The equipment is estimated to have a $5000 residual value and a five-year useful life. It is also estimated that the equipment will be used more than 100 000 times over its five-year life. As the condominium corporation's accountant, you have been asked to analyze the following independent amortization scenarios. Please be sure to show your calculations. Q(3A). If the condominium corporation uses the straight-line depreciation method, how much depreciation expense should be recorded for the year ended December 31, 2016? Activa Q(B). Suppose that the exercise equipment was used 16 000 times in 2016 and 24 000 times in 2017. Using the units-of-production depreciation method, calculate the net book value for the year ended December 31, 2017. Q(3C). If the condominium corporation chose to use the double-declining-balance method of depreciation instead, calculate the balance of the 'Accumulated Amortization, Exercise Equipment' account as of December 31, 2018. Assume that the DDB rate is 40%. Q(3D). Assuming that the condominium corporation is calculating amortization for internal purposes, which method would you recommend? Explain why. Q(3E). Explain how your chosen method would be similar or different from the method required for taxation purposes here in Canada. In Canada you are unable to use the previous method when claiming a depreciation expense on your taxes. If you acquired a depreciable asset (tangible asset), such as a building, furniture, or equipment, to use in your business or professional activities you are required to use the Capital Cost Allowance method (CCA). You can claim a portion of the assets cost each year as a deduction is called a capital cost allowance (CCA). Analyze the straight-line, units-of-production, double-declining-balance, and units-of-production depreciation / amortization methods Spectacular Condo Corp. purchased exercise equipment for its recreation room on January 1, 2016 for a cost of $60 000. The equipment is estimated to have a $5000 residual value and a five-year useful life. It is also estimated that the equipment will be used more than 100 000 times over its five-year life. As the condominium corporation's accountant, you have been asked to analyze the following independent amortization scenarios. Please be sure to show your calculations. Q(3A). If the condominium corporation uses the straight-line depreciation method, how much depreciation expense should be recorded for the year ended December 31, 2016? Activa Q(B). Suppose that the exercise equipment was used 16 000 times in 2016 and 24 000 times in 2017. Using the units-of-production depreciation method, calculate the net book value for the year ended December 31, 2017. Q(3C). If the condominium corporation chose to use the double-declining-balance method of depreciation instead, calculate the balance of the 'Accumulated Amortization, Exercise Equipment' account as of December 31, 2018. Assume that the DDB rate is 40%. Q(3D). Assuming that the condominium corporation is calculating amortization for internal purposes, which method would you recommend? Explain why. Q(3E). Explain how your chosen method would be similar or different from the method required for taxation purposes here in Canada. In Canada you are unable to use the previous method when claiming a depreciation expense on your taxes. If you acquired a depreciable asset (tangible asset), such as a building, furniture, or equipment, to use in your business or professional activities you are required to use the Capital Cost Allowance method (CCA). You can claim a portion of the assets cost each year as a deduction is called a capital cost allowance (CCA).
Expert Answer:
Answer rating: 100% (QA)
It seems that you are asking for help with a series of questions related to the depreciation calculations of exercise equipment owned by Spectacular Condo Corp using different methods of depreciation ... View the full answer
Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
Posted Date:
Students also viewed these accounting questions
-
On January 1, a machine with a useful life of five years and a salvage value of $25,000 was purchased for $125,000. What is the depreciation expense for year 2 under straight-line depreciation?...
-
Your portfolio project will provide specific answers to the questions that follow. Apply what you have learned in this course to your answers to these questions. Use the following templates for this...
-
You have been assigned to examine the financial statements of Picard Corporation for the year ended December 31, 2017, as prepared following IFRS. Picard uses a periodic inventory system. You...
-
Compute the 2-norm and o-norm of the following systems: 8+3 +1 (8+1)(8-2) 10 5 8+3 G(8) = G3(s) = -1 -21 1 0 0 2 3 0 01 7). [+] G(8) = 2 3 1 2 0 G4(8) = -1 1 0 1 0 -2 -3 0 1 10006 0 1 1 2 01 20 10 0 2
-
A certain application requires a ball bearing with the inner ring rotating, with a design life of 30 000 h at a speed of 300 rev/min. The radial load is 1.898 kN and an application factor of 1.2 is...
-
Show how C3 of fructose can epimerize under basic conditions.
-
Many firms, including Procter & Gamble, FedEx, and Occidental Petroleum, wish to do business in eastern Europe and in the countries that were once part of the former Soviet Union. What events could...
-
The Enron debacle created what one public official reported was a crisis of confidence on the part of the public in the accounting profession. List the parties who you believe were most responsible...
-
Find the measure of the marked angles. (4x+41) (7x+8)
-
You are called by the daughter of an elderly woman who lives alone. The daughter lives in another city and is concerned because her mother does not drive and has seemed unhappy and listless on the...
-
Chosen business: Sheraton hotel Petaling Jaya. Give a suggestion of an optimal strategy to be adopted for the chosen business. Use any one of the strategy generation tools that learn in the course...
-
A survey showed that 77% of adults need correction (eyeglasses, contacts, surgery, etc.) for their eyesight. If 14 adults are randomly selected, find the probability that no more than 1 of them need...
-
Use the concepts of direct-to-consumer advertising and detailing to explain why the demand for pharmaceutical drugs may result in a market failure . - Define DTCA and Detailing relate to quality and...
-
You run a regression analysis on a bivariate set of data (n obtain the regression equation y = - with a correlation coefficient of r = - - 120). With = 63.9 and y = 66.6, you 3.469x+1.828 0.311. You...
-
Poison Control Centers receive _ _ _ _ _ _ _ _ _ _ calls of children involved pesticide poisonings per year. 7 4 , 0 0 0 9 3 , 0 0 0 5 5 , 0 0 0 3 2 , 0 0 0
-
2. During the year, Ken sold a warehouse property for $180,000 (land - $15,000, building - $165,000). Brickbase used the building to store construction' equipment and the company paid Ken a fair...
-
. Saved Help Save & Exit Submit Liddy Corp. began constructing a new warehouse for its operations during the current year. In the year Liddy incurred interest of $20,000 on a working capital loa...
-
Information graphics, also called infographics, are wildly popular, especially in online environments. Why do you think infographics continue to receive so much attention? How could infographics be...
-
McGoun Industries pays income taxes on capital gains at a rate of 30 percent. At December 31, 2011, the company owns marketable securities that cost $90,000 but have a current market value of...
-
Four accounting majors, Maria Acosta, Kenzo Nakao, Helen Martin, and Anthony Mandella, recently graduated from Central University and began professional accounting careers. Acosta entered public...
-
The contribution margin ratio of the Furniture Department at Glad's Mercantile is 0.75. The trace able fixed costs for the Furniture Department are estimated at $188,000 per year. Sales in the...
-
A popular term for make-or-buy decisions is outsourcing decisions. There are many examples of outsourcing, from Nikes outsourcing of nearly all its production activities to small firms outsourcing of...
-
Quick Copies Company is a small printing and copying firm with three high-speed offset printing presses, five copiers (two color and three black and white), one collator, one cutting and folding...
-
Gulino Corporation manufactures snowmobiles in its White Mountain, Wisconsin plant. The following costs are budgeted for the first quarter's operations. Instructions Classify the above costs of...
Study smarter with the SolutionInn App