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  • 2020-09-14 FIFO, LIFO, AVERAGE, Depreciation Straight and Double Declining

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    Denis González
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    1. The document contains three problems involving different inventory costing methods and depreciation calculations. 2. For the first problem, it provides inventory quantities and costs using FIFO, LIFO, and average costing methods to calculate the total inventory costs for each. 3. The second problem calculates straight-line and double-declining balance depreciation expenses and book values over four years for an asset costing $190,000 with a residual value of $9,000. 4. Both depreciation methods result in a total depreciation expense of $181,000 over the four year period.

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    2020-09-14 FIFO, LIFO, AVERAGE, depreciation straight and double declining

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    1. The document contains three problems involving different inventory costing methods and depreciation calculations. 2. For the first problem, it provides inventory quantities and costs using FIFO, LIFO, and average costing methods to calculate the total inventory costs for each. 3. The second problem calculates straight-line and double-declining balance depreciation expenses and book values over four years for an asset costing $190,000 with a residual value of $9,000. 4. Both depreciation methods result in a total depreciation expense of $181,000 over the four year period.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    14 views4 pages

    2020-09-14 FIFO, LIFO, AVERAGE, Depreciation Straight and Double Declining

    Uploaded by

    Denis González
    1. The document contains three problems involving different inventory costing methods and depreciation calculations. 2. For the first problem, it provides inventory quantities and costs using FIFO, LIFO, and average costing methods to calculate the total inventory costs for each. 3. The second problem calculates straight-line and double-declining balance depreciation expenses and book values over four years for an asset costing $190,000 with a residual value of $9,000. 4. Both depreciation methods result in a total depreciation expense of $181,000 over the four year period.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 4

    Problem Two: Inventory by Three Cost Flow Methods

    FIFO:
    Model    Quantity     Unit cost       Total cost
    ------------------------------------------------------------------
    A10              4                76                  304
                         2                70                  140
    B15              6               184                1,104
                         2               170                 340   
    E60              5                70                 350 
    G83              9              259              2,331
    J34             15              270              4,050
    M90            3               130                 390
                        2               128                 256
    Q70            7                180              1,260
                       1                 175                 175
    ----------------------------------------------------------------
    Total         56                                  10,700                  

    LIFO:
    Model    Quantity     Unit cost       Total cost
    ------------------------------------------------------------------
    A10              4                64                  256
                         2                70                  140
    B15              8               176                1,408
    E60             3                75                   225
                        2                65                   130
    G83             7               242               1,694
                        2               250                 500
    J34             12              240               2,880
                        3               246                738
    M90            2               108                 216
                        2               110                  220
                        1                128                 128
    Q70            5               160                 800
                        3               170                 510
    ----------------------------------------------------------------
    Total         56                                     9,845         

    AVERAGE COST:
    Model    Quantity     Unit cost       Total cost                 Computation
    ------------------------------------------------------------------              ---------------------------------------------------------
    A10              6                70                  420                       (4*64 + 4*70 + 4*76) / 4+4+4 = 256+280+304 / 12 = 70
    B15              8               174               1,392                       (8*176 + 4*158 + 3*170 + 6*184) / 8+4+3+6 = 174 
    E60             5                69                  345                       (3*75 + 3*65 + 15*68 + 9*70) / 3+3+15+9 = 69
    G83             9              253                2,277                     (7*242 + 6*250 + 5*260 + 10*259) / 7+6+5+10 = 253
    J34             15             258                3,870                     (12-240 + 10*246 + 16*267 + 16*270) / 12+10+16+16 = 258
    M90            5              121                   605                      (2*108 + 2*110 + 3*128 + 3*130) / 2+2+3+3 = 121
    Q70             8              172                1,376                      (5*160 + 4*170 + 4*175 + 7*180) / 5+4+4+7 = 172
    ----------------------------------------------------------------
    Total         56                                    10,285
                             
    Problem Three: Compare Two Depreciation Methods.
    Straight-Line:
    A     Cost                       190,000      given data)
    B     Residual value         9,000       given data)
    C = A - B                       181,000        190,000 - 9,000 = 181,000
    D    Life in years               4               20Y4, 20Y5, 20Y6, 20Y7 = 4
    E = C / D                       45,250         181,000 / 4 = 45,250

    Double-declining-balance:
    Year    Beg, Book Value      Dep. Rate (%)      Dep. Expense   End. Book Value   Acc. Dep.
    ----------------------------------------------------------------------------------------------------------------------------------------
    20Y4      190,000                     50%                        95,000                95,000           95,000
    20Y5       95,000                      50%                        47,500                47,500          142,500
    20Y6       47,500                       50%                       23,750                 23,750         166,250
    20Y7       23,750                                                      14,750                   9,000          181,000
    ----------------------------------------------------------------------------------------------------------------------------------------

    REQUIREMENT:
                                        45,250                                                      95,000
                                        45,250                                                      47,500
                                        45,250                                                      23,750
                                        45,250                                                      14,750
    Total                          181,000                                                     181,000

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