PROBLEM. USE THE SEPARATE ANSWER SHEET.

Sherwin Company purchased a new machine on Feb. 1, 2020 for $110,000. Sherwin also paid $4,000 in shipping/installation costs and $1,000 in sales tax. The machine was estimated to have a life of 4 years and a salvage value of $15,000. The company has adopted a fractional-year convention where a full years depreciation is taken in the year that an asset is used for at least half a year, and no depreciation is taken in the year that an asset is used for less than half a year. The company has a calendar fiscal year. The machine did end up lasting exactly four years and was sold for the amount of the salvage value on Feb. 1, 2024.

1. Complete the schedule below, showing depreciation expense for each year and the total depreciation under each of the following methods: straight-line (SL), sum-of-years-digits (SYD), and double-declining-balance (DDB) method. Not all years may necessarily be relevant so some rows may be blank. Show your work (10 points).

YEAR SL SYD DDB 2020 2021 2022 2023 2024 2025 TOTAL

YEAR	Straightline	sum-of-years-digits	double declining
2020
2021
2022
2023
2024
2025
total

2. Assume the same information as in the previous problem. Also, assume that only the SL method is used. At the beginning of 2021, it is determined that the machine will last longer than initially thought, a total of 5 years instead of 4 years. However, the salvage value will remain the same. How much depreciation expense should be recorded in 2021?