Home / Questions / Tender Years purchased a new van on January 1, 2014, for $40,000. The life of the van is 4
Tender Years purchased a new van on January 1, 2014, for $40,000. The life of the van is 4 years or 100,000 miles, with an estimated residual value of $5,000. During the first year, the van was driven 20,000 miles. Compute the amortization for the first year applying each of the methods below.
a. ________________ Straight-line
b. ________________ Units-of-production
c. ________________ Double-declining-balance
38) Yamara Company purchased a $75,000 machine at the beginning of the year. The machine is expected to have a useful life of 5 years or 40,000 operating hours and a residual value of $15,000. Compute the amount of amortization for the first and second years under each of the methods below.
Year 1 Year 2 Method
a. $________________$________________Straight-line
b. $________________$________________Units-of-production: production in
year 1 - 6,000 hours; year 2 - 4,400 hours
c. $________________$________________Double-declining-balance
39) Assume an asset costing $72,000 is expecting to produce 400,000 units and have a salvage value of $6,000. During year 1, 75,000 units were produced; during year 2, 68,000 units were produced, and during year 3, 70,000 units were produced. Using units-of-production, compute the amortization expense for each of the three years.
40) A car is purchased for $25,000 on January 1. It has a 4-year life and a salvage value of $1,000. Compute the annual amortization expense using the double-declining-balance method for all 4 years.
41) A piece of equipment is purchased for $78,000 on January 1. It has a 5-year life and a salvage value of $8,000. Compute the annual amortization expense using the double-declining-balance method for all 5 years.
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