Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
1)Company purchases equipment on January 1, Year 1, at a cost of $480,000
1)Company purchases equipment on January 1, Year 1, at a cost of $480,000. The asset is expected to have a service life of 12 years and a salvage value of $43,200. Compute the amount of depreciation for each of Years 1 through 3 using the straight-line depreciation method. (Round answers to O decimal places, eg. 5,125.) Depreciation for Year 1 $ Depreciation for Year 2 $ Depreciation for Year 3 $ e Textbook and Media Compute the amount f depreciation for each of Years 1 through 3 using the sum-of-the-years'-digits method. Depreciation for Year 1 $ Depreciation for Year 2 $ Depreciation for Year 3 $
Nash Company purchases equipment on January 1, Year 1, at a cost of $480,000. The asset is expected to have a service life of 12 years and a salvage value of $43.200. Compute the amount of depreciation for each of Years 1 through 3 using the straight-line depreciation method. (Round answers to O decimal places, e.g. 5,125.) Depreciation for Year 1 $ Depreciation for Year 2 $ Depreciation for Year 3 $ e Textbook and Media Compute the amount of depreciation for each of Years 1 through 3 using the sum-of-the-years-digits method. Depreciation for Year 1 $ Depreciation for Year 2 $ Depreciation for Year 3 $
2) Sarasota Inc. bought a business that is expected to give a 25% annual rate of retum on the investment or the total amount paid for the business, $75,800 was deemed to be goodwill, and the rest was attributed to the identifiable net assets. Sarasota Inc estimated that the annual future samnings of the new business would be equal to the average ordinary earnings per year of the business over the past three years. The total net income over the past three years was $380,000. This amount Induded a loss on discontinued operations of $24,500 in one year and an unusual and non-recurring gain of $93,700 in one of the other two years. Calculate the fair value of the identifiable net assets that Sarasota Inc. purchased in this transaction. (Round answer to decimal places, eg. 5,275.) Fair value of the identifiable net assets
Expert Solution
1)
Straight line method.
Depreciation = ( Cost - salvage value) /useful life.
Cost = $ 480,000.
Salvage value = $ 43,200.
Useful life = 12 years.
Depreciation for year 1.
Depreciation = ( 480,000-43,200)/12
Depreciation = $ 36,400.
Depreciation for year 2 = $ 36,400.
Depreciation for year 3 = $ 36,400.
Depreciation under this method will be same throughout the year.
2. Under sum of years digit method.
Depreciation for year 1,
Depreciation = [( 480,000-43,200)/78]x12
Depreciation = $ 67,200.
Depreciation for year 2,
Depreciation = [ ( 480,000-43,200)/78]x11
Depreciation = $ 61,600.
Depreciation for year 3,
Depreciation = [(480,000-43,200)/78]x10
Depreciation = $ 56,000.
SUMMARY:
1. Depreciation for year 1 = $ 36,400.
Depreciation for year 2 = $ 36,400.
Depreciation for year 3= $ 36,400.
2. Depreciation for year 1 = $ 67,200.
Depreciation for year 2 = $ 61,600.
Depreciation for year 3 = $ 56,000.
Under sum of years digit method, add all the digits from 1 to 12 because useful life is 12 years. Total is 78. On first year 12 is multiplied and following year 11, 10, 9 and so on.
2)
We are given with the following information
Goodwill = $75,800
Normal rate of return = 25% on Capital employed
Total earnings in 3 years = $380,000
Less : unusual gain = (93,700)
Add : loss on discontinued operations = 24,500
Total Earnings maintainable = 310,800
Average earnings maintainable per year = 310,800/3
= $103,600
Under Capitalization method,
Goodwill = Capitalized value - Actual capital employed
Actual capital employed = Capitalized value - Goodwill
Capitalized value = Average annual earning/Normal rate of return
= 103,600/25%
= 414,400
Actual capital employed = 414,400 - 75,800
= 338,600
So fair value of identifiable assets = $338,600
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
