Accounting Principles and Business Finance Part 2

Reading Dyckman, Magee and Pfeiffer, Financial/Managerial Accounting for Decision Makers Accounting, 3rd Ed., McGraw Hill; ISBN 978-1-61853-234-3. Chapters 7-9, 11. Assignment – The questions within this assignment are derived from your Dyckman textbook but will be submitted here. Below are the locations where the questions can be found in your textbook. Answer M8-12, pg. 390 Answer M8-26, pg. 393 Answer E8-33, pg. 394

Question 1: A delivery van costing $18,000 is expected to have a $1,500 salvage value at the end of its useful life of 5 years. Assume that the truck was purchased on January 1, 2013. Compute the depreciation expense for 2014 (its second year) under each of the following depreciation methods: a. Straight-line b. Double-Declingin-Balance

Question 2: Palepu Company owns and operates a delivery van that originally cost $27,200. Straight-line depreciation on the can has been recorded for three years, with a $2,000 expected salvage value at the end of its estimated six-year useful life. Depreciation was last reorded at the end of the third year, at which time Palepu disposes of the van.

A. Compute the net book value of the can on the sale date.

B. Compute the gain or loss on sale of the van if its sale price is for: a. Cash equal to book value (of van) b. $15,000 cash c. $12,000 cash