PROBLEM 1-2A



PROBLEM 4-2A_______________________________________________________________

On January 1, 2007, the Oviedo Manufacturing Company purchased equipment for $170,000. The estimated useful life of the equipment is 4 years and the estimated salvage value is $10,000. The company expects the equipment to produce 480,000 units during its service life. Actual units produced were:

Year Units

2007 100,800

2008 130,080

2009 139,200

2010 109,920

Required:

1. Calculate the depreciation expense for each year of the 4-year life of the equipment using

a. Straight-line method.

b. Double-declining balance method.

c. Activity method (round your answers to the nearest dollar).

2. How does the choice of depreciation methods affect net income in each of the years? How does the choice of depreciation methods affect the balance sheet in each of the years?

Instructions:

1. Review the printed template called Problem 4-2A that follows these instructions. In some problems, some of the problem data have been entered for you in the data input section of the spreadsheet.

Enter the amounts where indicated.

2. There are 14 FORMULAS in the template that you need to provide to complete your analysis. Using the spaces provided below, write the formulas where requested in the template.

FORMULA 1 _________________ FORMULA 4 _________________

FORMULA 2 _________________ FORMULA 5 _________________

FORMULA 3 _________________ FORMULA 6 _________________

PROBLEM 4-2A

Continued

FORMULA 7 _________________ FORMULA 11 _________________

FORMULA 8 _________________ FORMULA 12 _________________

FORMULA 9 _________________ FORMULA 13 _________________

FORMULA 10 _________________ FORMULA 14 _________________

3. Click the Excel icon from the program manager screen to start the spreadsheet program. Click on the Open File SmartIcon/Button to retrieve the template for the problem. Enter the missing amounts in the appropriate cells on the template. Then enter the 14 FORMULAS where indicated on the template.

Type answer where indicated.

4. Click the Save File SmartIcon/Button to save your work.

5. Click the Print Button to print your work.

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