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
-
As part of the year-end audit, you are discussing the disclosure checklist with your client. The checklist identifies the items that must be disclosed in a set of GAAP financial statements. The...
-
body cools in air of constant temperature Tm - 2 0 \ deg C . If the temperature of the body changes from 1 0 0 to 6 0 \ deg in 2 0 minutes, determine how much more time it will need for the...
-
Your audit client, Household Appliances, Inc. operates a retail store in the center of town. Because of lack of storage space Household keeps inventory that is not on display in a public warehouse...
-
Singh Company prepares monthly cash budgets. Relevant data from operating budgets for 2013 are: All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first...
-
Do you agree with these statement? 1-In the time after the "Lost Decades," Japan underwent dynamic changes in response to internal and external negative events including international issues with the...
-
Vierra Popova Ltd (Example9.1) now wishes to prepare its cash budget for the second six months of the year. The budgeted income statements for each month of the second half of the year are as...
-
Evaluate the challenges and strategies associated with implementing quality control in complex, global supply chains, considering the impact of multi-tier suppliers, geographical dispersion, and...
-
What are the benefits of a mass population vaccination program? What are the risks? Why do U.S. public schools require that students be vaccinated against certain diseases? Should citizens be free to...
-
A car is driven east for a distance of 4 1 km , then north for 2 9 km , and then in a direction 2 6 \\ deg east of north for 2 3 km . Determine ( a ) the magnitude of the car\'s total displacement...
-
Go to the Cato Institute's home page (www.cato.org) and read the article - "How Rent Control Drives Out Affordable Housing" by William Tucker. After reading the article, answer the following...
-
1) Briefly describe problems with Canadian agriculture and various monopolies. 2) Explain how it affects the economy and various policies. 3) Explain Food insecurity and how various agricultural...
-
If a 3 0 % acquisition is made at book value and the investor has significant influence over the investee, what will be the relationship between the Equity Investment account and the investee's...
-
Find the Macaulay duration of a $1,000 10-year 6% bond with annual coupons and a $1,200 call if the yield to maturity is 8%.
-
D Which of the following is considered part of the Controlling activity of managerial accounting? O Choosing to purchase raw materials from one supplier versus another O Choosing the allocation base...
-
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...
-
For the original concrete composite post design of Problem 1.13, assume that the steel rods are made of 4340 steel, and that the rods are to be replacedby IM9 carbon fiber bundles of the same length...
-
For the original 4340 steel-reinforced concrete post design of Problem 1.13 and the new IM9 carbon fiber-reinforced concrete post design of Problem 1.16, compare the tensile stress-to-tensile...
-
A representative section from a composite lamina is shown in Figure 2.7 along with the transverse stress and strain distributions across the fiber and matrix materials in the section. The composite...
Study smarter with the SolutionInn App