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Fuller Corporation purchased a new machine on Jan 4, 2019 for $175,000 cash. The machine has a useful life of five years or of 32,000
Fuller Corporation purchased a new machine on Jan 4, 2019 for $175,000 cash. The machine has a useful life of five years or of 32,000 hours. After the useful life the machine will have a residual value of $2,000. The machine was used for 5,200 hours in 2019 and 6,400 hours in 2020.
Required:
- Calculate the depreciation expense for 2019 and 2020 under each of the following methods:
- Straight-line (3 marks)
- Double diminishing-balance (5 marks)
- Units-of -production (5 marks)
- Calculate the carrying amount at the end of 2020 for the machine when the company is using the Straight-line depreciation method. (3 marks)
- Record the journal entry for the cash purchase of the machine on Jan 4, 2019 and for its depreciation expense for the year ended December 31, 2019 under the units-of-production method. (4 marks)
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