Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Pharoah Limited purchased a machine on account on April 2, 2018, at an invoice price of $374,920. On April 4, it paid $1,930 for delivery
Pharoah Limited purchased a machine on account on April 2, 2018, at an invoice price of $374,920. On April 4, it paid $1,930 for delivery of the machine. A one-year, $3,980 insurance policy on the machine was purchased on April 5. On April 18, Pharoah paid $7,240 for installation and testing of the machine. The machine was ready for use on April 30. Pharoah estimates the machine's useful life will be five years or 6,143 units with a residual value of $74,460. Assume the machine produces the following numbers of units each year: 905 units in 2018; 1,484 units in 2019; 1,279 units in 2020; 1,345 units in 2021; and 1,130 units in 2022. Pharoah has a December 31 year end. (a) Your Answer Correct Answer (Used) Determine the cost of the machine. Cost of the machine $ 384,090 Calculate the annual depreciation and total depreciation over the asset's life using: (Round the depreciation cost per unit to the nearest cent. Round answers to decimal places, eg. 5,275.) (1) Straight-line method Year Depreciable Cost Depreciation Expense Accumulated Depreciation Carrying Amount 2018 $ 2019 2020 2021 2022 2023 (2) Double-diminishing-balance method Depreciation Expense Accumulated Depreciation Carrying Amount Year Opening Carrying Amount 2018 $ 2019 2020 2021 2022 2023 (3) Units-of-production method Units-of-production Depreciation Expense Accumulated Depreciation Carrying Amount Year 2018 2019 2020 2021 2022 Which method causes net income to be lower in the early years of the asset's life? Double-Diminishing-Balance Method 4
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started