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On 1 January 2016, Lucky Textile paid RM250,000 for a machinery. In addition to the basic purchase pric company paid an installation costs of RM30,000,
On 1 January 2016, Lucky Textile paid RM250,000 for a machinery. In addition to the basic purchase pric company paid an installation costs of RM30,000, set-up fee of RM12,500 and delivery cost of RM7,500. The management estimated that the useful life of machinery will be five years with a residual value of RM25,000. The machinery will produce 200,000 units in its first year (i.e. 2016), 150,000 units in Year 20 100,000 units in Year 2018; 75,000 units in Year 2019; 25,000 units in Year 2020. Required: (a) Determine the total cost of machinery. (2.5 marks) (b) Prepare the machine's depreciation schedule for 5 years (from Year 2016 to 2020) based on each of following depreciation methods: (1) Straight-line (5 marks) (ii) Double-declining (5.5 marks) (iii) Units-of-production (5 marks) (c) Explain two categories of spending on plant assets after acquisition. (4 marks) (d) Depreciation of a plant asset is based on three main factors. List and briefly explain all of them
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