Question

The following information relates to Hawkrigg Corporation’s purchase of equipment on 15 June 20X7:
Invoice price ..................... $ 210,000
Discount for early payment (if paid by 30 June)....... $ 1,050
Shipping costs..................... $ 2,000
Installation ...................... $ 1,500
Testing ........................ $ 3,000
The equipment was installed and tested during the week of 22 June 20X7. Hawkrigg paid the invoice price on 1 July 20X7. The equipment was ready for use on 30 June and put into production on 3 July 20X7. Hawkrigg management uses straight- line depreciation for the company’s equipment and expects to use the asset for six years. he estimated residual value is zero. Their fiscal year end is 31 December.

Required:
1. What is the book value of the equipment after installation?
2. Compute depreciation expense for 20X7, using the straight- line method, under each of the following assumptions:
a. Exact, to the closest month
b. Full first- year convention
c. Half- year convention
3. Calculate depreciation expense for both 20X7 and 20X8 under each of the methods in requirement (2), using double- declining balance ( DDB) depreciation.



$1.99
Sales9
Views207
Comments0
  • CreatedFebruary 17, 2015
  • Files Included
Post your question
5000