Jiang Company Ltd. purchases equipment on January 1, 2017, 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 2017, 2018, and 2019 using the straight-line method.
(b) Calculate the amount of depreciation for each of 2017, 2018, and 2019 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 out- put device with a cost of $200,000, residual value of $22,000, and useful life of 12 years. Prepare the journal entry to record the purchase on January 1, 2017.
(d) Assume the information given in part (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 2017 using the most appropriate methods.
(e) Assume the information given in part (c) above with respect to the cost components. The equipment is expected to provide benefits evenly over time. Also assume that the equipment has a salvage value of $37,000 and a physical life of 14 years. The salvage values of the input device, processor, and output device are $3,000, $10,000, and $19,000, respectively. The physical lives of the input device, processor, and output device are 6 years, 12 years, and 14 years, respectively. Calculate the amount of depreciation for 2017, 2018, and 2019 using the straight-line method. Jiang Company Ltd. prepares financial statements under ASPE.