Glans Company purchased equipment on account on April 6, 2012, at an invoice price of $442,000. On
Question:
Glans Company purchased equipment on account on April 6, 2012, at an invoice price of $442,000. On April 7, 2012, it paid $4,000 for the delivery of the equipment. A one-year, $3,000 insurance policy on the equipment was purchased on April 9, 2012. On April 22, 2012, Glans paid $6,000 for the installation and testing of the equipment. The equipment was ready for use on May 1, 2012. Glans estimates that the equipments useful life will be four years, with a residual value of $20,000. It also estimates that, in terms of activity, the equipments useful life will be 150,000 units. Glans has an April 30 fiscal year-end. Assume the actual usage is as follows:
# of units Year ended April 30 22,600 2013 45,600 2014 49,700 2015 32,200 2016
a) Determine the cost of the equipment
b) Prepare the depreciation schedules for the life of the asset using the straight-line depreciation method
c) Prepare the depreciation schedules for the life of the asset using the diminishing balance at double the straight-line rate depreciation method
d) Prepare the depreciation schedules for the life of the asset using the units-of-production depreciation method