Near Company purchased a machine on January 1, 2016, by paying cash of $85,000.
ID: 2563021 • Letter: N
Question
Near Company purchased a machine on January 1, 2016, by paying cash of $85,000. The machine has an estimated useful life of five years, is expected to produce 30,000 units, and has an estimated residual value of $10,000.
Required:
Calculate depreciation expense to the nearest whole dollar for each year of the machine's useful life under.
a. Straight-line depreciation method.
b. Double declining-balance method.
c. If the machine was used to produce and sell 4,800 units in 2016, what would be the depreciation expense using the units-of-production method?
d. What is the book value of the machine after three years using the double declining-balance method?
e. What is the book value of the machinery after three years using the straight-line method?
Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up Statementshowing Computations Paticulars Amount Costof Van 85,000.00 Salvage value 10,000.00 Life in years 5.00 a) SLM Depreciation per year = (85000 - 10000)/5 15,000.00 2,016.00 15,000.00 2,017.00 15,000.00 2,018.00 15,000.00 2,019.00 15,000.00 2,020.00 15,000.00 b) Life 5 Years Double decling balance method rate = 20%*2 40% Particulars 2016 2017 2018 2019 2020 Opening Balance 85,000.00 51,000.00 30,600.00 18,360.00 11,016.00 Depreciation at 40% 34,000.00 20,400.00 12,240.00 7,344.00 1,016.00 Book Value at end 51,000.00 30,600.00 18,360.00 11,016.00 10,000.00 c)2016 Dep = (85000-10000)/30000*4800 12,000.00 d) 18,360 as seen above in Point b e)Book Value = 85000 - 15000*3 = 40,000
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