Depreciating Expense and Remaining LifeComplete both sections 1 and 2.Depreciation Expense Valley Corporation purchased a new piece of equipment on June 1,2015. The cost of this machine was $325,000. The company estimated thatthe machine would have a salvage value of $25,000 at the end of itsservice life. Its life is estimated at four years, and its working hoursare estimated at 50,000 hours. The year end is December 31.Compute the depreciation expense under the following methods in anExcel spreadsheet. Each of the following should be considered unrelated:Straight-line depreciation for 2015Units of production method for 2015, assuming that machine usage was 13,000 hoursSum-of-the-years’ digits for 2015Double-declining balance for 2015Remaining Life Taylor Lewis Company has provided information on intangible assets as follows.A patent was purchased from Craig Company for $4,000,000 on June 1,2015. Lewis estimated the remaining useful life of the patent to beeight years. The patent was carried in Craig’s accounting records at anet book value of $3,500,000 when Craig sold it to Lewis.During 2016, a franchise was purchased from Faragher Company for$360,000. In addition, 8% of revenue from the franchise must be paid toFaragher. Revenue from the franchise for 2016 was $1,950,000. Lewisestimates the useful life of the franchise to be 12 years and takes afull year’s amortization in the year of purchase.Lewis incurred research and development costs in 2016 as follows:Materials and equipment$286,500Personnel$153,700Indirect costs $95,355 $535,555Lewis estimates that these costs will berecouped by December 31, 2019. The materials and equipment purchasedhave no alternative uses.On January 1, 2016, because of recent events in the field, Lewisestimates that the remaining life of the patent purchased on June 1,2015, is only five years from January 1, 2016.Prepare a schedule showing the intangiblesection of Lewis’s balance sheet at December 31, 2016. Show supportingcomputations in good form.Prepare a schedule showing the income statement effect for the yearended December 31, 2016, as a result of the facts above. Show supportingcomputations in good form.Please provide short narrative Your submission must show all calculations used to arrive at theanswers. Any written comments must be formatted according to APA Requirements. Insert comments, as needed, using Excel’s “Add a Comment” function.
