Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Indy Co . purchased machinery for $ 7 5 , 0 0 0 on March 9 , 2 0 X 1 . The machine has

Indy Co. purchased machinery for $75,000 on March 9,20X1. The machine has an estimated life of 5 years and salvage value of $1,500. Estimated output is 49,000 machine hours. The machine was used 3,200 hours in 20X1 and 4,800 hours in 20X2.
(Round all answers to the nearest dollar)
1. Calculate depreciation expense and book value of the machine for 20X1 and 20X2 using:
a. Straight-line method
b. Units-of-production method
c. Double-declining balance method
2. Now, assume, that same machine was instead purchased originally on January 1,20X1. During 20X3, Indy determines that the useful life of the machine will be 6 years rather than 5 years and the salvage value will be $2,500. Calculate revised depreciation for 20X3 assuming Indy uses straight-line depreciation.
3. Answer the following questions:
a. Which depreciation method results in the greatest amount of expense over an assets life?
b. Which depreciation method results in the greatest expense in the early years of an assets life?

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

Accounting

Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren

23rd Edition

978-0324662962

More Books

Students also viewed these Accounting questions