Individual Assignment

1 Construction Company acquired a new crane for Birr 360,500 at the beginning of year 1.
The crane has an estimated residual value of Birr 35,000 and an estimated useful life of five
years. The crane is expected to last 10,000 operating hours. It was used 1800 hours in year 1,
2000 hours in year 2 and 2500 hours in year 3. Based on the information given above:

Compute the annual depreciation and the carrying value for the crane for each of the first
three years under each of the following methods:

A. Straight line method,

B. Units of production method,

2 What are the types of inventory found in merchandise business and manufacturing
business?

3 What is the purpose of holding inventory?

4 Given the following information from Berta Trading Inc. compute cost of ending inventory
and cost of goods sold.

April 1 410 units @ Br.95 = Br.38,950 (Beginning Inventory)

May 15 Purchases 120 units @ Br.90 = Br.10,800
July 3 Purchases 500 units @ Br.98 = Br.49,000
June 26 Purchases 85 units @Br. 102 = Br.8,670
Assume that 400 units are remained on hand

5 Use the following illustrative to compute cost of goods sold and ending inventory value.
September 1.Beginning inventory Br.82, 300
Purchases during September (net) 240,000
Merchandise available for sales Br. 322,300
Sales in the month of September (Net) Br.290, 000
(Assume that based on experience gross profit rate is 35% of net sales)

GOOD LUCK

PREPARED BY ENGIDA

Submission date Monday after final exam