Question 1 On January 1, 2017, Crane SA purchased the following two machines for use in its production process. Machine A: The cash price of this machine was R$34,900. Related expenditures included: sales tax R$2,600, shipping costs R$ 150, insurance during shipping R$ 70, installation and testing costs R$120, and R$160 of oil and lubricants to be used with the machinery during its first year of operations. Crane estimates that the useful life of the machine is 5 years with a R$4,300 residual value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. The recorded cost of this machine was R$240,000. Crane estimates that the useful life of the machine is 4 years with a R$15,000 residual value remaining at the end of that time period. Machine B: Prepare the following for Machine A. (Round answers to 0 decimal places, e.g. 2,125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) 1. The journal entry to record its purchase on January 1, 2017. 2. The journal entry to record annual depreciation at December 31, 2017. No. Account Titles and Explanation Debit Credit 1. Equipment 37,780 Cash 37,780 2. Depreciation Expense Accumulated Depreciation Calculate the amount of depreciation expense that Crane should record for Machine B each year of its useful life under the following assumptions. (Round answers to 0 decimal places, e.g. 2,125. Round cost per unit to 2 decimal place, e.g. 1.25.) (1) (2) (3) Crane uses the straight-line method of depreciation. Crane uses the declining-balance method. The rate used is twice the straight-line rate. Crane uses the units-of-activity method and estimates that the useful life of the machine is 183,680 units. Actual usage is as follows: 2017, 60,900 units; 2018, 49,800 units; 2019, 39,990 units; 2020, 32,990 units. Calculate the amount of depreciation expense that Crane should record for Machine B each year of its useful life under the following assumptions. (Round answers to 0 decimal places, e.g. 2,125. Round cost per unit to 2 decimal place, e.g. 1.25.) (1) (2) (3) Crane uses the straight-line method of depreciation. Crane uses the declining-balance method. The rate used is twice the straight-line rate. Crane uses the units-of-activity method and estimates that the useful life of the machine is 183,680 units. Actual usage is as follows: 2017, 60,900 units; 2018, 49,800 units; 2019, 39,990 units; 2020, 32,990 units. 2017 2018 2019 2020 Straight-line method R$ R$ R$ R$ Declining-balance method R$ R$ R$ R$ Units-of-activity method R$ R$ R$ R$ Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense : In Year 1 (2017) In Year 4 (2020) Over the 4-year period
