Apache, Inc. purchased equipment at the beginning of 2011 for $91,000. In addition, Apache paid $5,000 for delivery of the equipment to its plant and $5,000 for installation of the equipment. The equipment has an estimated salvage value of $9,000 and an estimated life of 8 years or 100,000 hours of operation. Apache is looking at alternative depreciation methods for the equipment. Determine the following:
A) The depreciation expense for the year 2011 using the straight-line depreciation method.

B) The total accumulated depreciation at December 31, 2012, using the urits-of-activity depreciation method. Assume that the equipment is operated for 15,000 hours in 2011 and 20,000 hous in 2012.

C) The book value of the equipment at December 31, 2011 , using the double-declining-balance depreciation method.

D) Which of the above methods is considered accelerated?

E) What are the advantages of using an accelerated depreciation method as compared to the straight-line method?

Question

Apache, Inc. purchased equipment at the beginning of 2011 for $91,000. In addition, Apache paid $5,000 for delivery of the equipment to its plant and $5,000 for installation of the equipment. The equipment has an estimated salvage value of $9,000 and an estimated life of 8 years or 100,000 hours of operation. Apache is looking at alternative depreciation methods for the equipment. Determine the following:
 A) The depreciation expense for the year 2011 using the straight-line depreciation method.

B) The total accumulated depreciation at December 31, 2012, using the urits-of-activity depreciation method. Assume that the equipment is operated for 15,000 hours in 2011 and 20,000 hous in 2012.

C) The book value of the equipment at December 31, 2011 , using the double-declining-balance depreciation method.

D) Which of the above methods is considered accelerated?

E) What are the advantages of using an accelerated depreciation method as compared to the straight-line method?

Quizplus · Accepted Answer

The Answer of Apache, Inc. purchased equipment at the beginning of 2011 for $91,000. In addition, Apache paid $5,000 for delivery of the equipment to its plant and $5,000 for installation of the equipment. The equipment has an estimated salvage value of $9,000 and an estimated life of 8 years or 100,000 hours of operation. Apache is looking at alternative depreciation methods for the equipment. Determine the following:
 A) The depreciation expense for the year 2011 using the straight-line depreciation method.

B) The total accumulated depreciation at December 31, 2012, using the urits-of-activity depreciation method. Assume that the equipment is operated for 15,000 hours in 2011 and 20,000 hous in 2012.

C) The book value of the equipment at December 31, 2011 , using the double-declining-balance depreciation method.

D) Which of the above methods is considered accelerated?

E) What are the advantages of using an accelerated depreciation method as compared to the straight-line method?