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Having trouble solving this method. The book only tells me so much without a hands on example. On January 1, 2014, Thao Company purchased the
Having trouble solving this method. The book only tells me so much without a hands on example.
On January 1, 2014, Thao Company purchased the following two machines for use in its production process. Machine A : The cash price of this machine was $49,200. Related expenditures included: sales tax $2,000, shipping costs $100, insurance during shipping $90, installation and testing costs $100, and $110 of oil and lubricants to be used with the machinery during its first year of operations. Thao estimates that the useful life of the machine is 5 years with a $4,100 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. Machine B: The recorded cost of this machine was $216,000. Thao estimates that the useful life of the machine is 4 years with a $13,500 salvage value remaining at the end of that time period. 1 The journal entry to record its purchase on January 1, 2014. . 2 The journal entry to record annual depreciation at December 31, 2014. . No. Account Titles and explanation Debit Credit 1a. 1b. 2a. 2b. Calculate the amount of depreciation expense that Thao should record for Machine B each year of its useful life under the following assumptions. (1 ) (2 ) (3 Thao uses the straight-line method of depreciation. Thao uses the declining-balance method. The rate used is twice the straight-line rate. Thao uses the units-of-activity method and estimates that the useful life of the machine ) is 147,810 units. Actual usage is as follows: 2014, 49,600 units; 2015, 40,050 units; 2016, 32,130 units; 2017, 26,030 units. 2014 Straight-line Method DecliningBalance method Units-of-activity method 2015 2016 2017Step by Step Solution
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