preciation (20 Points) e depreciation for a $116,000 machine with a $4,000 that
ID: 2593522 • Letter: P
Question
preciation (20 Points) e depreciation for a $116,000 machine with a $4,000 that can produce 205,000 units over its 10 year 1ife Calculate the salvage va following methods.Assume the machine was purchased using the 2017. During 2017 the machine produced 13,000 units January 218 it produced 28,000 unit. Write down the amount of January 3, and in ation for 2017 and 2018 assuming each of the following depreciation methods in the spaces below. YOU MUST SHow YOUR WORK TO RECEIVE ANY CREDIT! 2017 2018 1. Straight-line 2. Double-declining balance 3. Units of Production Part II. Make the entry to record the depreciation of this machine using straight-line depreciation for December 31, 2018 and then describe where and how the machine would be reported on the DEC 31, 2018 balance sheet of this company.Explanation / Answer
Part I
Straight line depreciation:
Annual depreciation = (cost – salvage)/no of years = (116000-4000)/10 = 11200
2017 = 11200
2018 = 11200
Double declining method
Deprecation rate = 1/10*2 = 20%
2017 = (116000*20%) =23200
2018 = ((116000-23200)*20%) =18560
Units of production method
Deprecation rate = (116000-4000)/205000 = 0.55
2017 = ((116000-4000)/205000)*13000 = 7102
2018 = ((116000-4000)/205000)*28000 = 15298
Depreciation method
2017
2018
Straight line depreciation
11200
11200
Double declining method
23200
18560
Units of production method
7102
15298
Part II
Entry
Depreciation expense Dr. 11200
Accumulated depreciation Cr. 11200
Balance sheet
Machinery 116000
Less: accumulated depreciation (22400) 93600
(accumulated depreciation = 11200*2 =22400)
Depreciation method
2017
2018
Straight line depreciation
11200
11200
Double declining method
23200
18560
Units of production method
7102
15298
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