SOLUTION: Supreme Auto Service opened a new service center three decades ago. At the time the center was preparing to open, new equipment was purchased totaling $355,000. Residual value of t
Question 1208975: Supreme Auto Service opened a new service center three decades ago. At the time the center was preparing to open, new equipment was purchased totaling $355,000. Residual value of the equipment was estimated to be $45,000 after 20 years. The company accountant has been using straight-line depreciation on the equipment.
(a)
How much was the annual depreciation for the original equipment (in $)?
$
8,000
Incorrect: Your answer is incorrect.
(b)
If the hydraulic lift had originally cost $14,200, what would its residual value (in $) be after 20 years?
$
1800
Correct: Your answer is correct.
(c)
After six years of operation, the original hydraulic lift was replaced with a new model that cost $21,000. Book value was allowed for the old machine as a trade-in. What was the old hydraulic lift's book value when the replacement machine was bought (in $)?
$
8,000
Incorrect: Your answer is incorrect.
(d)
What was the book value of the equipment inventory at the six-year point, substituting the new hydraulic lift for the original after the new lift had joined the inventory (in $)?
$ Answer by ikleyn(52775) (Show Source): You can put this solution on YOUR website! .
(a) The annual depreciation for the original equipment is
= 15,500 dollars. ANSWER