December 2015. Question 3 Machinery purchased by the Andrew Corporation for $240

Question

December 2015. Question 3 Machinery purchased by the Andrew Corporation for $240,000 on May 1, 2014 was estimated to have a 10 year life with a salvage value of $24,000. Andrew uses the sum of the years digits method to calculate deprecation but is thinking of switching to double declining balance. Required: 1: Calculate the depreciation expense for the end of the 3"d year (12/31/16) using the SYD method. 2: What would your answer be assuming Andrew used the double declining balance method? 3: Using the answer from required 2 above what would be the entry to record the sale of the machinery on January 1, 2017 assuming that Andrew sold it for $145,000

Explanation / Answer

1. The depreciation expense for the end of third year using SYD method is $31,418

Working:

2. Depreciation under Double Declining Method for the third year is $33,280.

Working:

3. Entry to record sale of the machinery on Jan.1, 2017 for $145,000.(Assuming double declining balance method)

Cost of the asset 240000 Salvage value 24000 Depreciable value 216000 Sum of years digit method Year Depreciable Period of Depreciation Value Depreciation Rate Amount (months) A B C D (A*B*C/12) 2014 216000 8 10/55 26182 2015 216000 12 9/55 35345 2016 216000 12 8/55 31418

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.