# Depreciation and Depletion Problems

Description

Hi, i need help solving these math problems in excel. Please highlight any formulas used. Thank You.TECH 3365
Depreciation and Depletion
Problem 1:
Note:
Some solutions below show values only; others show full formulas. When you submit your assignment,
be sure that all of your work and formulas are shown!!
A building that was constructed for \$12,000,000 has an estimated useful life of 20 years and a salvage value of \$500,000.
a.) What will be the depreciation charge per year under the straight line method?
b.) Build a depreciation table for the life of the building using the straight line method.
Beginning net book
Ending net book
Depreciation charge
value
value
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Note that this final ending net book value (NBV) equals the salvage value given.
Problem 2:
A machine that was purchased for \$47,000 has an estimated useful life of seven years and a scrap value of \$5,000. Use the straight line method to find
the depreciation charge per year, then build a table to show the net book value each year over the life of the machine. Make the table similar to that of
problem 1 (insert rows below to fit).
Problem 3:
Kent Farms purchases a tractor for \$26,500. It is estimated that the tractor will have a \$2,500 trade-in value at the end of the useful life, which is
estimated to be five years.
a.) Under the straight line method, what would be the depreciation charge per year?
b.) Suppose instead that the useful life is estimated to be 30,000 total service hours. The actual number of hours expected to be spent in operation for
each year is as follows:
1st year:
5,500 hours
2nd year:
7,400 hours
3rd year:
6,200 hours
4th year:
5,800 hours
5th year:
5,100 hours
Use the service hours method to find the depreciation charges and net book value for each year. Construct a depreciation schedule for the life of the
tractor similar to that of problem 1 (insert rows to fit). Assume that the cost and trade-in value are the same as above.
Amount to depreciate:
Beginning NBV
1
2
3
4
5
Charge
Ending NBV
Problem 4:
ForestCorp purchases a piece of equipment costing \$540,000. The equipment has an estimated useful life of six years and a trade in value of \$30,000.
a.) Under the straight line method, what would be the depreciation charge per year?
b.) Suppose that the equipment is expected to produce a total of 100,000 units as follows:
Year 1:
24,000
Year 2:
23,000
Year 3:
19,000
Year 4:
18,000
Year 5:
10,000
Year 6:
6,000
Use the product units method to find the depreciation charges for each year. Construct a depreciation table. Insert rows below to fit.
Beginning NBV
Charge
Ending NBV
1
2
3
4
5
6
Problem 5:
For problem 3, suppose instead that the tractor was used only 3,200 hours for the first year. The estimated useful life total is still expected to be 30,000
hours. What would be the revised depreciation charge for the first year?
Problem 6:
A copy machine, which was bought for \$5,300, has an estimated useful life of 5 years and a trade-in value of \$200. Use the sum of the years-digits
method to construct a depreciation table and provide the depreciation charges for each year.
Sum of years-digits:
Years remaining
Beginning NBV
See cell formula
Charge
Amount to depreciate:
Ending NBV
1
2
3
4
5
Problem 7:
Repeat problem 6 and recompute the depreciation charges each year if 3 years is added to each of the remaining years.
Problem 8:
Repeat problem 6 and recompute the depreciation charges each year if 6 years is added to each of the remaining years.
Problem 9:
ABC LLC purchased a truck for \$65,000. The expected life is 6 years and the salvage value is expected to be \$5,000. Construct a depreciation table using
the sum of the years-digits method to find the depreciation charge each year.
Problem 10:
Repeat problem 9 and recompute the depreciation charges each year if 5 years is added to each of the remaining years.
Problem 11:
For problem 6, reconstruct the depreciation table using the federal tax method.
5 years – percentage rate per year:
20%
Maximum allowed rate:
40%
Problem 12:
For problem 6, reconstruct the depreciation table using the fixed rate formula.
Remember the fixed rate formula:
r =1− n
T
C
r = annual rate
n = number of years of useful life
C = original cost
n=
T=
C=
Year
1
2
3
4
5
Problem 13:
Beginning NBV
Charge
r=
Ending NBV
For the fixed-rate formula method, the final ending NBV will equal the salvage value.
For problem 9, reconstruct the depreciation table using the federal tax method.
6 years – percentage rate per year:
17%
Maximum allowed rate:
33%
Year
Beginning NBV
Charge
1
2
3
4
5
6
Ending NBV
Problem 14:
For problem 9, reconstruct the depreciation table using the fixed rate formula.

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