Question

Mastery Problem: Long Term Assets: Fixed and Intangible Patterson Planning Corp., You have been hired by Patterson Planning Corp. an events planning company that recently had a fire in which some of the accounting records were damaged. In reviewing the fixed asset records, you find three depreciation schedules that are not labeled. They are listed in the following table. One of the assets has a depreciation rate of $4.30 per hour. Year Schedule A Schedule B Schedule C 1 $9,890 $10,000 6,000 $10,125 13,500 2 6,450 7,310 3 3,600 13,500 4 2,160 13,500 6,450 4,300 5 740 3,375 6 6,880 4,730 7 8 Total $22,500 $54,000 $46,010 Depreciation 1. Determine which depreciation method is shown in each schedule on the Patterson Planning Corp.panel. Then match each schedule to the asset description that best characterizes the type assets often depreciated using that method. Asset Description Depreciation Schedule Used ccat murinn stendur eck My Work All work saved. Email Instructor Save and Ex Submit Assigen ent Score: 73.91%

Answer 1

wed for D Am schedule. A Depreciation charged under Schedule A is reducing by same rate each year, therefore diminishing balance method of Depreciation is Schedule A. Depreciation rate charged under this method will be equal to rate of decrease in which is Calculated as follows Depreciation rate = Depreciatin in - Depreciation in Year 2 Depreciation in year 1 te year هویہ year 1 = 0.40 10,000, 1.6,000 10000 Depreciation rate 40% 0

Schedule B. Depreciation charged under Schedule B is Constant (ie, $ 13,500) over the years except In year 1 and Year 5 which is due to time factor Clien used for gmonths in and 3 3 months in Year 5 Year 5). Therefore, straight line method is used for Schedule B. Year I Schedule c As it is given in the question that one of the assets a depreciation rate of $4.30 per hour Production depreciation Method is used for Therefore, Units of Schedule Deprecation Schedule lled Schedule B revenues Asset Description Asset producing steady Asset with variable in service time schedule e Asset Generating a Greater revenues revenues Schedule A early years > in the

Depreciation 2 Awa) Schedule Useful life 5 years Residual value - Book value (cost) - Total in Schedule Book value (cost) - Depreciation Expense for Year | Depreciation rate Given, Depreciation Expense = $10,000 for years Book value (cost) = $ 10,000 4094 Book value (cost) = $ 25,000 Residual values $ 25,000/ 5 $ 22,500 Residual value $ 2.500 Asset Cost or Book value (cost is same Asset Cost = $ 10,000 40% % = $10,000 MO 100

11 Asset cost - $ 25,000 Schedule B. in Year I Useful life = 4 years = 4 years (Because 9 month Depreciation is charged and in year 5. 3 months depreciation is charged). Annual Depreciations Cost - Residual value Useful life $13,500 Cost Residual value 4 years, Cost Residual value $13,500 x 4 Costa Residual value. = $ 54,000 Cost is $5upoo and then residual is (Because Total depreciation charged over useful useful life can not exceed cost) Residual value = $ 0 o Asset Cost $ 54,000

Schedule c life - 그 years . Useful 1 Total Depreciation changeel over 7years Total Operating Howrs - Total Depreciation $46,010 Variable rate per hown $ 46,010 $4.30 per hour 10,700 brows. Total Operating hows. = i Residual value = Asset Cost C Useful life 5 years B 4 Years 16,700 ha CH! a 0 Residual value $ 2,500 Asset Cost a $25,000 Total Operating howe 1 0 10,700be

final Question 1 Total Depreciation will be decreased by Increased Residual value Total Depreciations $54,000 $1,500 Aut Depreciation. $ 52,500 * Total Depreciation for year 3 Book value at the beginning of year 3 3 3 (Depreciation for first = cost 2 years $54.000 $10,125 + $13,500 $ 54,000 $23.625 5 Book value at the = $30,375 beginning of Year 3 Remaining life 5 years Debreciable value from = Book value at the Increased Year 3 3 Beginning of Year 3 Residual value $ 30,375 $1,500.

$ 28,875 Depreciable value for year 3 Depreciation for year 3 = Debreciable value for Year 3 Remaining life $ 28,875 Z 5 $ 5,775 Depreciation for your 3 Labai fill in the Blanks to filled. Hence . (11 Aus , the Answer . is The ass et now! total Depreciation for this will be $ 52.500 The Depreciation amount for Year 3 will $5,775 Ang be

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