Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Armon Ltd purchased machinery for its manufacturing process on 1 April 2020. The machinery cost $137,500. Armon Ltd estimates that the machinery has a useful
Armon Ltd purchased machinery for its manufacturing process on 1 April 2020. The machinery cost $137,500. Armon Ltd estimates that the machinery has a useful life of 6 years, with a residual value of $17,500. It is also estimated that the machinery will produce 50,000 units over its useful life. The reporting period ends on 31 December. Ignore GST. Required: a. Prepare the journal entry to record Depreciation Expense for year ended 31/12/2020 using straight line depreciation method. (1 Mark) b. Assuming that in the year ending 31/12/2020, 2,500 units were produced. What is the carrying amount of the machinery on 31/12/2020, if the company uses the units-of- production depreciation method. (1 Mark)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started