C)

On 1 June 2018, FastTrack Company purchased a machine by paying $1,000,000 cash and signing $200,000 5% one-year notes payable for the remaining balance. The machine was expected to be used for 5 years. The residual value was expected to be $30,000. The financial year-end date is 31 December and the company adjusts its account monthly. Depreciation for fractional years is recorded to the nearest full month. Accountant of FastTrack Company is analyzing the depreciation expenses in coming two years by using different depreciation methods.

After preparing the depreciation schedules, the company decided to use straight-line method to depreciate the above machine, effective on the purchase date of machine.

On 1 February 2020, the company purchased a $200,000 new engine to recondition the above machine. The company paid $5,000 to install new engine and $1,000 interest to finance the purchase. The company believes the estimated useful life can be extended for 3 years more with residual value of $27,000.

Required:

1. Complete depreciation schedules (as shown below) by using (i) straight-line method and

(ii) double- declining balance method. (4 marks)

Year	Computation	Depreciation Expense	Accumulated Depreciation	Book Value
2018
2019

2. Calculate annual depreciation expense of the above machine for the year 2020.