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1-46 10 Practice 11-1 the company acquired a machine on January 1 at an original

ID: 2401247 • Letter: 1

Question

1-46 10 Practice 11-1 the company acquired a machine on January 1 at an original cost of $115,000 The sidual value is 520,000 and its estimated life is five years (1)Compute the annual straight-Ine dr amount, 2) make the jounal entry necessary to record depreciation expense for the frg w compute the machines book value at the end of the first year Practice 11- 0 Computing Sum-of-the-Years-Digits Depreciation The compary acquied a machine on January 1 at an original cost of $115,000. The machines residual value is $20,000, and its estimated life is five years Assume that the company yeas-digits depreciation Compute (1) depreciation expense for each year of the machines heye and 2) book value at the end of each year of the machine's five-year life Practice 114 Practice 11-11 uses smd Computing Double-Declining-Balance Depreciation The company acquired a machine on January 1 at an original cost of $100.000. The ma Practice 11-5 Practice 1 estimated residual value is 510,000, and its estimated life is four years. The company Ue declining-balance depreciation and switches to straight-line in the final year of the macheel Compute (1) depreciation expense for each year of the machine's four-year life and 2) bood the end of each year of the machine's four-year life 11-12

Explanation / Answer

11-3: (1) Annual straight line depreciation amount = (115,000-20,000)/5

= $19,000

(2) Journal entry will be:

(3) Machine book value at the end of the 1st year = 115,000-19,000 = $96,000

11-4 (1) Sum of the years = 1+2+3+4+5 = 15. Thus depreciation fraction in 1st year = 5/15

Thus depreciation amount of 1st year = (115000-20000)*5/15 = $31,666.67. Similarly depreciation for all the years are shown below:

(2) Book value:

11-5: (1) Here rate of depreciation using double declining rate = (100/4)*2 = 50%

Thus depreciation for years 1 to 3 when double declining rate is used:

In the 4th year straight line method is used and this is the final year so the asset will be depreciated by 12500-10000 = $2500

(2) Book value of machine at the end of each year:

Debit Ctedit Depreciation account 19,000.00 Accumulated depreciation account - Machine 19,000.00