Jiang Company Ltd. Purchases equipment on January 1, 2014, for $387,000 cash. The asset is expected to have a useful life of 12 years and a residual value of$39,000.Jiang prepares financial statements under IFRS.
Instructions
(a) Calculate the amount of depreciation for each of 2014, 2015, and 2016 using the straight-line method.
(b) Calculate the amount of depreciation for each of 2014, 2015, and 2016 using the double-declining-balance method. (In performing your calculations, round percentages to the nearest one-hundredth and round dollar amounts to the nearest dollar.)
(c) Assume that the equipment consists of an input device with a cost of $55,000, residual value of $5,000 and useful life of 5 years; a processor with a cost of $132,000, residual value of $ 12,000, and useful life of 10 years; and an output device with a cost of $200,000, residual value of $39,000, and useful life of 12 years. Prepare the journal entry to record the purchase on January 1, 2014.
(d) Assume the information given in pan (c) above. Also assume that the benefits of the input device and processor are expected to flow to Jiang evenly over time, but that the output device is expected to provide the greatest benefits in the early years. Calculate the amount of depreciation for 2014 using the most appropriate methods.