# Depreciation problems - 20249

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BE11-10

In its 2007 Annual Report Campbell Soup Company reports beginning-of-the-year total assets of \$7,745 million, end-of-the-year total assets of \$6,445 million, total sales of \$7,867 million, and net income of \$854 million.

(a)        Compute Campbell's asset turnover ratio. (Round answer to 3 decimal places,i.e. 5.252.)

times

(b)        Compute Campbell's profit margin on sales. (Round answer to 2 decimal places, i.e. 5.25.)

%

(c)        Compute Campbell's rate of return on assets. (Round answers to 2 decimal places, i.e. 5.25.)

%

E11-8

(Depreciation Computation–Replacement, Nonmonetary Exchange)

Goldman Corporation bought a machine on June 1, 2008, for \$31,800, f.o.b. the place of manufacture. Freight to the point where it was set up was \$200, and \$500 was expended to install it. The machine's useful life was estimated at 10 years, with a salvage value of \$2,500. On June 1, 2009, an essential part of the machine is replaced, at a cost of \$2,700, with one designed to reduce the cost of operating the machine. The cost of the old part and related depreciation cannot be determined with any accuracy.

On June 1, 2012, the company buys a new machine of greater capacity for \$35,000, delivered, trading in the old machine which has a fair market value and trade-in allowance of \$20,000. To prepare the old machine for removal from the plant cost \$75, and expenditures to install the new one in the new place were \$1,500. It is estimated that the new machine has a useful life of 10 years, with a salvage value of \$4,000 at the end of that time. (The exchange has commercial substance.)

Assuming that depreciation is to be computed on the straight-line basis, compute the annual depreciation on the new equipment that should be provided for the fiscal year beginning June 1, 2012.

\$

P11-2

(Depreciation for Partial Periods–SL, Act., SYD, and DDB)

The cost of equipment purchased by Charleston, Inc., on June 1, 2010 is \$89,000. It is estimated that the machine will have a \$5,000 salvage value at the end of its service life. Its service life is estimated at 7 years; its total working hours are estimated at 42,000 and its total production is estimated at 525,000 units. During 2010 the machine was operated 6,000 hours and produced 55,000 units. During 2011 the machine was operated 5,500 hours and produced 48,000 units.

Compute depreciation expense on the machine for the year ending December 31, 2010, and the year ending December 31, 2011, using the following methods. (Round all answers to 0 decimal places, i.e. 10,510.)

Straight-line.

2010    \$

2011    \$

Units-of-output.

2010    \$

2011    \$

Working hours.

2010    \$

2011    \$

Sum-of-the-years'-digits.

2010    \$

2011    \$  Declining balance (twice the straight-line rate).

2010    \$

2011    \$

Solution Description

Report Campbell Soup Company reports beginning-of-the-yea

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