QUESTION 3:

Inverness Corporation purchased a new machine on January 1, 2013. The machine cost $400,000 and had an estimated salvage value zero.

Inverness estimated that the machine will have a useful life of 4 years.

Required:

Part 1:

Compute depreciation expense for Years 1 through 4 using the following methods: straight line

YEAR	Depreciation Expense	Accumulated Depreciation	Book value
1	100000
2	100000
3	100000
4	100000

Part2:

What will report on Balance sheet and Income Statement at the end of Year 2 (related to a new machine) if Inverness Corporation is using straight-line depreciation method?

Balance Sheet: Income Statement: