On 1 July 2020, PMP Pty Ltd purchased a new printing machine for $200,000. The company expected the machine to be used for ten (10) years or 10,000 machine-hours, with an estimated residual value of $20,000 at the end of its useful life. Actual usage of the machine for the first three (3) years was noted as follows:

• Year 1:  500 hours
• Year 2:  800 hours
• Year 3:  3000 hours

Required:

1. Calculate the depreciation expense for the second year using each of the methods below:

Straight-line 

1. Units of production
2. Reducing balance method at the rate of 20% each year

 Calculate the carrying amount of the machine at the end of year 2, assuming the straight – line method was used.

2. Prepare the journal entry to record the sale of the machine, assuming that the straight – line method was used and the machine was sold at the end of year 2 for $150,000