Question
Oromiya Construction Company purchased a cement mixer on January 2,20x5 for $14,500. The mixer expected to have a useful life of 5 years and a
Oromiya Construction Company purchased a cement mixer on January 2,20x5 for $14,500. The mixer expected to have a useful life of 5 years and a residual value of $1,000. The company's engineers estimated that the mixer would have a useful life of 7,500 hours. It used for 1500 hours in 20x5, 2625 hours in 20x6, 2,250 hours in 20x7, 750 hours in 20x8 and 375 hours in 20x9. The company fiscal year ends on December 31.
Required
1. Compute the depreciation expense and carrying value for 20x5 to 20x9, using the following methods
A) Straight line method B) Production C) Double declining balance
2. Show the balance sheet presentation for the cement mixer on Dec.31, 20x5. Assume the straight-line method
3. What conclusion can you draw from the patterns of yearly depreciation?
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