Problem 9-7A Machine Acquired Cost Salvage Value Useful Life (in years) Deprecia

Question

Problem 9-7A

Machine

Acquired

Cost

Salvage
Value

Useful Life
(in years)

Depreciation
Method

MACHINE 1

MACHINE 2

MACHINE 3

LINK TO TEXT

LINK TO TEXT

2013

2014

Problem 9-7A

In recent years, Farr Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below.

Machine

Acquired

Cost

Salvage
Value

Useful Life
(in years)

Depreciation
Method

1 Jan. 1, 2012 $124,000 $25,900 9 Straight-line 2 July 1, 2013 94,000 11,700 5 Declining-balance 3 Nov. 1, 2013 86,820 8,620 7 Units-of-activity
For the declining-balance method, Farr Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 34,000. Actual hours of use in the first 3 years were: 2013, 710; 2014, 4,340; and 2015, 5,950.

Explanation / Answer

a machine 1 year book value depreciation accumulated depreciation 124000 2012 10900 10900 2013 10900 21800 2014 10900 32700 2015 10900 43600 machine 2 book value depreciation accumulated depreciation 94000 2013 18800 18800 2014 75200 30080 48880 2015 45120 18048 66928 machine 3 book value depreciation accumulated depreciation 86820 2013 1633 1633 2014 85187 9982 11615 2015 75205 13685 25300 b machine 2 book value depreciation accumulated depreciation 94000 2013 28200 28200

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