Assignment:

Complete the following problems. You must show your work on the math problems to get full credit.

1. Consider the following data on an asset:

Cost of the asset, I: $25,000

Useful life, N: 5 years

Salvage value, S: $3,000

Compute the annual depreciation allowances and the resulting book values, using the straight-line depreciation method.

2. A company's accounting record shows the following:

                                             Truck A        Truck B
Useful Life (miles):                   250,000       200,000
Miles Driven During Year:          13,000        11,000
Purchase Cost:                        $40,000      $30,000
Salvage Value:                         $4,250        $3,000

Determine the amount of depreciation for each truck during the year.

3. Consider the following data on an asset:

Cost of the asset, I: $35,000

Useful life, N: 7 years

Salvage value, S: $4,000

Compute the annual depreciation allowances and the resulting book values, using the double-declining-balance method.

4. Identify which of the following expenditures is considered as a capital expenditure that must be depreciated (capitalized):

a) Painted the warehouse building, both interior and exterior, for $16,500.

b) Installed a conveyor belt system to automate some part of a production processes for $25,000.

c) Purchased a fax machine for $8,000.

d) Paid $18,000 to lease a dump truck for eight months.

e) Purchased a new computer system for $5,000.

f) Purchased land to build a new facility for $400,000.

g) Installed a water dispenser in a company dining area for $3250.

h) Purchased a patent on an energy-saving device over six years at a cost of $42,000.

i) Repaved a parking lot for $15,000.

j) Purchased a spare part for a framing machine for $5,000.