Question
Buffalo Company purchased Machine #201 on May 1, 2017. The following information relating to Machine #201 was gathered at the end of May. Price $
Buffalo Company purchased Machine #201 on May 1, 2017. The following information relating to Machine #201 was gathered at the end of May.
Price | $ 122,400 | |
Credit terms | 2/10, n/30 | |
Freight-in | $ 1,152 | |
Preparation and installation costs | $ 5,472 | |
Labor costs during regular production operations | $ 15,120 |
It is expected that the machine could be used for 10 years, after which the salvage value would be zero. Buffalo intends to use the machine for only 8 years, however, after which it expects to be able to sell it for $ 2,160. The invoice for Machine #201 was paid May 5, 2017. Buffalo uses the calendar year as the basis for the preparation of financial statements.
Compute the depreciation expense for the years indicated using the following methods.
(1) | Straight-line method for 2017 | $ | ||
(2) | Sum-of-the-years'-digits method for 2018 | $ | ||
(3) | Double-declining-balance method for 2017 | $ |
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