ACC - Your client, Burley Designs, recently acquired a new machine
Question # 00071241
Posted By:
Updated on: 05/16/2015 10:39 AM Due on: 05/21/2015
Your client, Burley Designs, recently acquired a new machine to build bicycle wheels for the tandems, recumbents and trailers they build. Total machine cost after installation, calibrations and other related capitalized costs was $18,250. The machine has an expected life of 7 years with a residual value of $2000. The machine is capable of producing 20,000 wheels per year. Burley estimates that they will only ask the machine to produce as follows:
Year
1
2
3
4
5
6
7
Anticipated Product Schedule
Wheels
13,500
14,250
15,000
16,200
17,000
18,000
19,100
Required:
1. Prepare and present depreciation schedules for the machine. Use straight line, units of production and the double declining methods of depreciation.
2. For each method make a brief explanation of how the schedules were determined.
3. Discuss an advantage and disadvantage of each method.
4. Recommend a particular depreciation method for Burley to use and support your recommendation with reasoning.
5. Remember that your audience is professional, but not accountants.
Year
1
2
3
4
5
6
7
Anticipated Product Schedule
Wheels
13,500
14,250
15,000
16,200
17,000
18,000
19,100
Required:
1. Prepare and present depreciation schedules for the machine. Use straight line, units of production and the double declining methods of depreciation.
2. For each method make a brief explanation of how the schedules were determined.
3. Discuss an advantage and disadvantage of each method.
4. Recommend a particular depreciation method for Burley to use and support your recommendation with reasoning.
5. Remember that your audience is professional, but not accountants.
-
Rating:
/5
Solution: ACC - Your client, Burley Designs, (Solution)