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Question 2 (20 marks) Sunshine Corporation purchased a new machine on Jan 4, 2018 for $190,000 cash. The machine has a useful life of 10
Question 2 (20 marks)
Sunshine Corporation purchased a new machine on Jan 4, 2018 for $190,000 cash. The machine has a useful life of 10 years or of 25,000 hours. After the useful life the machine will have a residual value of $2,000. The machine was used for 2,500 hours in 2018 and 3,500 hours in 2019.
Required:
- Calculate the depreciation expense for 2018 and 2019 under each of the following methods:
- Straight-line (3 marks)
- Double diminishing-balance (5 marks)
- Units-of -production (5 marks)
- Calculate the carrying amount at the end of 2019 for the machine when the company is using the Straight-line depreciation method. (3 marks)
- Record the journal entry for the cash purchase of the machine on Jan 4, 2018 and for its depreciation expense for the year ended December 31, 2019 under the units-of-production method. (4 marks)
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