Fast Limited purchased a machine on 1 April 2015 at a cost of $140,000 with a residual value of $8,000. The estimated useful life of this machine was ten years. The estimated operation output was 50,000 hours.

Compute the depreciation expense of the machine at the year-end on 31 December for 2015 and 2016 by using the methods below (show your workings):

1.Straight-line (with depreciation calculated to the nearest whole month),

2.200%-declining-balance (with half-year convention),

3.Unit-of-output (5,000 hours in 2015; 5,500 hours in 2016).

	(i) Straight-line Method	(ii) 200% declining- balance Method	(iii) Units-of-output Method
Year	Depreciation expense	Depreciation expense	Depreciation expense
2015
2016

Part II (6 marks)

On 31^st March 2017, Fast Limited sold the truck for $1,600,000 cash. The truck was purchased in April 2014 for $3,300,000 with an estimated useful of 5 years and a residual value $300,000. The company uses straight-line depreciation method with half- year convention and usually updates the depreciation expense annually. Prepare the following journal entries (show your workings):

a)to update the depreciation expenses in 2017. (2 marks)

b)to dispose of the truck. (4 marks)

Part III (6 marks)

What is the acquisition cost of the machinery (show your workings) based on the Following information:

Set-up fee	$700
Usual maintenance fee	$200
Transportation-out fee when dispose	$400
Invoice price	$200,000
Trade discount received	5% of invoice price
Import tax	4% of invoice price
Freight-in charge	$1,500
Cost of repair after installation	$1,200