Question
Comprehensive: Acquisition, Subsequent Expenditures and Depreciation On January 2, 2016, Lapar Corporation purchased a machine for $50,000. Lapar paid shipping expenses of $500, as well
Comprehensive: Acquisition, Subsequent Expenditures and Depreciation
On January 2, 2016, Lapar Corporation purchased a machine for $50,000. Lapar paid shipping expenses of $500, as well as installation costs of $1,200. The company estimated that the machine would have a useful life of 10 years and a residual value of $3,000. On January 1, 2017, Lapar made additions costing $3,600 to the machine in order to comply with pollution-control ordinances. These additions neither prolonged the life of the machine nor increased the residual value.
Required: 1. If Lapar records depreciation expense under the straight-line method, how much is the depreciation expense for 2017?
$
2. Assume Lapar determines the machine has three significant components as shown below.
Component | Amount | Service Life | Salvage Value |
---|---|---|---|
A | $25,000 | 10 years | $3,000 |
B | 15,000 | 5 years | 0 |
C | 11,700 | 3 years | 0 |
If Lapar uses IFRS, what is the amount of depreciation expense that would be recorded?
$
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