Exercise P11-1 (LO2) Depreciation for Partial Period-SL. STD. DOB

Alladin Company purchased Machine #201 on May 1. 2020. The following information relating to Machine #201 was gathered at the end of May

relating to Machine #201 was gathered at the end of May

Machine price. 85,000

Credit terms. 2/10. n/30

Freight-in costs. 800

Preporation and installation costs. 3,800

Lobor costs during regular production operations pute. 10,500

Expected time that the machine could be used. 10 years

Estimated salvage value at the end of 10 wears.

Expected time that Alladin intends to use the machine. 8 years

Estimated sales price at the and of 8 wears. 1,500

The invoice for Machine #201 was paid May 5, 2020. Alladin uses the calendar year as the basis for the preparation of financial statements.

mastructions

(al Compute the depreciation expense for the years indicated using the following

methods. (Round to the nearest dollar.)

T11 Straight-line method for 2020

1. Sum-of-years'-digits method for 2021
2. Double-declining-bolance method for 2021
3. Double declining balance method for 2020

depreciation base computation:

Straight-line using the SLN function:

Sum-of-gears -digits using the SYD function

Year. annual. year 2021

2020

2021

Total

Double-declining balance using the DOB function

(b) Suppose Kate Crow, the president of Alladin, tells you that beoguse the company is a new organization, she expects it will be several years before production and sales reach optimum levels. She asks you to recommend a depreciation method that will allocate less of the company's depreciation expense to the early years and more to later years of the assets" lives. What method would you recommend?

Recommendation and commento:

(2) Sum-of-years'-digits using tha SVn fumatina (3) Doubla-declining balance using the DDB function Suppose Kate Crow, the president of Alladin, telis you that because the company is a new organization, she expects it will be several years before production and sales reach optimum levels. She asks you to recommend a depreciation method that will allocate less of the company's depreciation expense to the early years and more to later years of the assets' lives. What method would you recommend