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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

T = trade-in (salvage) value

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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