Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In early July 2019, Masterton Ltd is considering the acquisition of some machinery for $1 320 000 (GST inclusive) to be used in the manufacture

In early July 2019, Masterton Ltd is considering the acquisition of some machinery for $1 320 000 (GST inclusive) to be used in the manufacture of a new product. The machinery has a useful life of 10 years, during which management plans to produce 500 000 units of the new product. The residual value of the machinery is $100 000.

The following projections were made in order to select a depreciation method to be used for the machinery.

year ended 30 June units of output repairs and profit

maintenance before depriciation

2020 50000 70000 350000

2021 45000 60000 340000

2022 55000 90000 355000

2023 58000 95000 360000

2024 60000 100000 380000

In calculating the profit before depreciation, all expenses have been deducted, including the repairs and maintenance expense.

Required

As the accountant for Masterton Ltd, prepare separate depreciation schedules for the machinery for the 5-year period, using the following depreciation methods:

i. straight-line

ii. diminishing balance

iii. sum-of-years'-digits

iv. units-of-production.

Use the following headings for each schedule: 'Year ending 30 June', 'Annual depreciation expense', 'Accumulated depreciation', 'Carrying amount at end of year'.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: J. David Spiceland, James Sepe, Lawrence A. Tomassini

4th Edition

0072994029, 9780072994025

More Books

Students also viewed these Accounting questions

Question

Why do people say "The losses on short selling are unlimited?"

Answered: 1 week ago