Hanson Manufacturing Company purchased a machine for $1,060,000 at the beginning of 2018. The machine has an estimated useful life of five years and an estimated residual value of $270,000. The machine, which is expected to last 20,000 hours, was operated 3,000 hours in 2018 and 2,000 hours in 2019.

REQUIRED:

1. Compute the annual depreciation for 2018 and 2019 under the following depreciation methods. You must show all of your work to receive any credit.

(a) Straight-line:

(b) Units of production:

(c) Double-declining balance:

No. 5 continued:

2. Assume the machine is sold at the beginning of 2020 for $760,000. Prepare the journal entry to record the disposal of the machine under each of the three methods.

(a) Straight-line:

(b) Units of production:

(c) Double-declining balance: