Economics 7

Assignment:

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

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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.