Kaur Inc. purchased a $1,500 computer on January 1, 2015 with an expected service life of three years and a residual value of $150. Kaur Inc. uses the double-declining balance depreciation method for this computer. Kaur Inc. closes its books yearly on December 31^st.

Note: Please round depreciation expenses to whole numbers.

a. Calculate the depreciation expense for the computer for the first year (year ended Dec 31, 2015)

b. Calculate the depreciation expense for the computer for the third year (year ended Dec 31, 20217)

Question 2

a. On January 1, 2015, Kite Company purchases machinery at a cost of $430,000. The useful life is 6 years, and the salvage value is $10,000. Assuming straight-line depreciation, compute the book value of the machinery, after all entries are made, on December 31, 2016.

b. Assume that, on January 1, 2017, Kite Company decides to sell the machinery for $315,000 in cash. What would be the transaction for the sale of the machinery?

Balance Sheet

Income Statement

Cash Asset

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Noncash Assets

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Liabil- ities

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Contrib. Capital

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Earned Capital

Rev-enues

Expen- ses

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Net Income

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