Swanson & Hiller, Inc., purchased a new machine on September 1, 2006, at a
cost of $108,000. The machine's estimated useful life at the time of the
purchase was five years, and its residual value was $8,000.
Instructions
a. Prepare a complete depreciation schedule, beginning with calendar year
2006, under each of the methods listed below (assume that the half-year
convention is used):
1. Straight-line.
2. 200 percent declining-balance.
3. 150 percent declining-balance,switching to straight-line when
that maximizes the expense.
b. Assume that Swanson & Hiller sells the machine on December 31, 2009,
for $28,000 cash. Compute the resulting gain or loss from this sale under
each of the depreciation methods used in part a.
(Round your answers to the nearest dollar amount. Amounts in parenthesis do
not require a negative sign in front of them. Omit the "$" sign in your
response.)
a. (1) Straight-Line Schedule:
Year Depreciation Expense Accumulated Depreciation Book Value
2006 ( ) ( ) ( )
2007 ( ) ( ) ( )
2008 ( ) ( ) ( )
2009 ( ) ( ) ( )
2010 ( ) ( ) ( )
(2) 200% Declining-Balance Schedule:
Year Depreciation Expense Accumulated Depreciation Book Value
2006 ( ) ( ) ( )
2007 ( ) ( ) ( )
2008 ( ) ( ) ( )
2009 ( ) ( ) ( )
2010 ( ) ( ) ( )
(3) 150% Declining-Balance Schedule:
Year Depreciation Expense Accumulated Depreciation Book Value
2006 ( ) ( ) ( )
2007 ( ) ( ) ( )
2008 ( ) ( ) ( )
2009* ( ) ( ) ( )
2010* ( ) ( ) ( )
*Switch to straight-line
b. Computation of gains or losses upon disposal:
1. Straight-Line
Cash proceeds $ ( )
Book value on 12/31/09 ( )
2007 ( ) ( ) ( )
2008 ( ) ( ) ( )
2009* ( ) ( ) ( )
2010* ( ) ( ) ( )
*Switch to straight-line
b. Computation of gains or losses upon disposal:
1. Straight-Line
Cash proceeds $ ( )
Book value on 12/31/09 ( )
Loss on disposal $ ( )
2. 200% Declining-Balance:
Cash proceeds $ ( )
Book value on 12/31/09 ( )
Gain on disposal $ ( )
3. 150% Declining-Balance:
Cash proceeds $ ( )
Book value on 12/31/09 ( )
Loss on disposal $ ( )
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