Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Part 1-11 Marks Grumpy Inc purchased a machine on January 1, 2021, at a cost of $120,000. The machine was originally estimated to have

image text in transcribedimage text in transcribed

Part 1-11 Marks Grumpy Inc purchased a machine on January 1, 2021, at a cost of $120,000. The machine was originally estimated to have a salvage value of $15,000 and an estimated life of 3 years. The machine is expected to produce a total of 100,000 components during its life, distributed as follows, 40,000 in 2021, 35,000 in 2022, and 25,000 in 2023. Required: a) Calculate the amount of depreciation to be charged in each of the three years, using each of the following methods. i) Straight-line method ii) Units of activity iii) Declining balance at a rate of 200% b) Which method results in the highest depreciation expense: i) During the first two years? i) Over all three years? Part 2-7 Marks Sleepy Ltd negotiated a purchase of land, building and equipment from Bambi Corp. The purchase was completed on June 28, 2021 at a total cash cost of $800,000. The estimated market value of each asset at the time was: land, $330,000; building. $520,000; and machinery, $150,000.

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 Business Reporting For Decision Making

Authors: Jacqueline Birt, Keryn Chalmers, Albie Brooks, Suzanne Byrne, Judy Oliver

4th Edition

978-0730302414, 0730302415

More Books

Students also viewed these Accounting questions

Question

Identify the impact of absence on the organisation? LO1

Answered: 1 week ago

Question

What are the potential advantages of this approach? LO1

Answered: 1 week ago