121/2017 Problem 9BA Problem 9-8A In recent years, Sheridan Company has purchase

Question

121/2017 Problem 9BA Problem 9-8A In recent years, Sheridan 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 Salvage Value Useful Life (in years) Depreciation Method Machine Acquired Jan. 1, 2015 July 1, 2016 Nov. 1, 2016 Cost $126,000 95,000 78,600 $38,000 10,100 7,600 Straight-line Declining-balance Units-of-activity For the declining-balanoe method, Sheridan Company uses the double-declining rate. For the units-of- activity method, total machine hours are expected to be 35,500. Actual hours of use in the first 3 years were: 2016, 800; 2017, 4,200; and 2018, 5,500 Compute the amount of accumulated depreciation on each machine at December 31, 2018. MACHINE 1 MACHINE 2 MACHINE 3 Accumulated Depreciation at December 31 If machine 2 was purchased on April 1 instead of July 1, what would be the depreciation expense for this machine in 2016? In 20177 2016 2017 Depreciation Expense Question Attempts: 0 of 2 used Copyright © 2000-201 7 by John Wilay & Sons. lno or rolled arrpania. All rights r https:lledugen.wileyplus.com edugenisharedfassignmenties gprint.uni

Explanation / Answer

1) Machine 1 Straight-line Depreciation = ($126,000 - $38,000)/8 $121,250.00 per Year Accumulated Depreciation = $121,250 x 4 $485,000.00 Machine 2 Straight-line rate = 1/5 20.00% Double Declining Rate = 2 x 20% 40.00% Beginning Value Depreciation Ending value Accumulated depreciation July 2016 $95,000.00 $19,000.00 $76,000.00 $19,000.00 Jan 2017 $76,000.00 $30,400.00 $45,600.00 $49,400.00 Jan 2018 $45,600.00 $18,240.00 $27,360.00 $67,640.00 Jan 2019 $27,360.00 $10,944.00 $16,416.00 $78,584.00 Jan 2020 $16,416.00 $6,316.00 $10,100.00 $84,900.00 Machine 3 Depreciation Exp = (78600 - 7600)/35,500 hours $2.00 per unit Date Units Depreciation Accumulated depreciation Nov 1,2016 800 $1,600.00 $1,600.00 Jan 2017 4200 $8,400.00 $10,000.00 Jan 2018 5500 $11,000.00 $21,000.00 b) Machine 2 Straight-line rate = 1/5 20.00% Double Declining Rate = 2 x 20% 40.00% Beginning Value Depreciation Ending value Accumulated depreciation April 2016 $95,000.00 $28,500.00 $66,500.00 $28,500.00 Jan 2017 $66,500.00 $26,600.00 $39,900.00 $55,100.00 Jan 2018 $39,900.00 $15,960.00 $23,940.00 $71,060.00 Jan 2019 $23,940.00 $9,576.00 $14,364.00 $80,636.00 Jan 2020 $14,364.00 $4,264.00 $10,100.00 $84,900.00

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