Question
calculate depreciation for each company prior to the revision for 2018&2019 and the annual depreciation for 2020 Company A, Company B and Company C had
calculate depreciation for each company prior to the revision for 2018&2019 and the annual depreciation for 2020
Company A, Company B and Company C had purchased the same piece of machinery 2 years ago at the beginning of 2018. The machinery was originally purchased for $96,000 and had a residual value of $6,000. At the time of purchase the estimated useful life of the asset was 4 years or the equivalent useful life in units-of-production equal to 22,500 units. At the beginning of 2020, it was determined that the total useful life of the asset was 6 years rather than 4 years originally expected or the equivalent total units-of-production of 32,200 units. In addition, to the extended useful life of the machinery, the revised residual value is estimated at $2,200. The actual number of units produced in the first two years was 6,100 units per year. The actual production for 2020 was 6,400 units. Each of the companies uses a different method of depreciation with Company A using the straight-line method of depreciation, Company B uses the units-of-production method with a per unit depreciation charge rounded to the nearest cent and Company C uses the double diminishing-balance method.
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