Question 1 Coronado Company purchased Machine #201 on May 1, 2017·The following

Question

Question 1 Coronado Company purchased Machine #201 on May 1, 2017·The following information relating to Machine #201 was gathered at the end of May. Price Credit terms Freight-in Preparation and installation costs Labor costs during regular production $93,500 2/10, n/30 $880 4,180 $11,550 operations It is expected that the machine could be used for 10 years, after which the salvage value would be zero. Coronado intends to use the machine for only 8 years, however, after which it expects to be able to sell it for $1,650. The invoice for Machine #201 was paid May 5, 2017, Coronado uses the calendar year as the basis for the preparation of financial statements. (a) Your answer is incorrect. Try again. Compute the depreciation expense for the years indicated using the following methods. Depreciation Expense (1) Straight-line method for 2017 (2) Sum-of-the-years'-digits method for 2018 (3) Double-declining-balance method for 2017 8883 21713 17765 Attempts: 1 of 5 usedSAVE FOR LATER SUBMIT ANSWER

Explanation / Answer

Ans. 1 Straight line depreciation (2017) 7920 Depreciation = Depreciable amount / useful life * 8 /12 (95040 / 8) * 8 / 12 7920 Depreciable amount = Purchase price - discount + freight + installation - salvage value 93500 - (93500 * 2%) + 880 + 4180 - 1650 95040 Ans. 2 Sum-of-years'-digits method (2018) 21378 Year Total depreciation 2017 2018 1 8 / 36 * 95040 21120 14080 7040 2 7 / 36 * 95040 18480 12320 Total dep. 21378 Notes: 21120 * 8 / 12 = 14080 21120 * 4 / 12 =    7040 18480 * 8 / 12 =   12320 Ans. 3 Double declining balance method (2017) 16115 Depreciable amount * Rate of depreciation * 8 / 12 96690 * 25% * 8 /12 16115 *Rate of depreciation = 100 / 8 * 2 25% *Depreciable amount = Purchase price - discount + freight + installation 93500 - (93500 * 2%) + 880 + 4180 96690

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