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Question 3 LG Berhad operates four types of machines. Because of their varied functions, management has decided that four different depreciation methods will be used
Question 3 LG Berhad operates four types of machines. Because of their varied functions, management has decided that four different depreciation methods will be used to determine depreciation charges. Information on the equipment is summarised as follows: Machin e type Date acquire d 1/7/16 Cost (RM) 95 400 Scrap value (RM) 10 000 Useful life 4 years Depreciation method Diminishing balance 2 1/7/16 148 000 15 000 6 years Sum-of-years- digits 3 1/1/17 27 500 5 500 10 years Straight-line 4 15/4/18 39 700 4 600 20,000 hours Hours of production The depreciation rate used for machine type 1 is 25%. Use of machine type 4 was 1,200 hours in the year ended 30 June 2018; 3,200 hours in 2019; and 2,600 hours in 2020. Required: Assuming the financial year ends on 30 June each year and that depreciation is recorded to the nearest month, calculate the depreciation charges for year ended 30 June 2017, 2018, 2019 and 2020 by preparing a schedule with the following headings. Show all workings. Depreciation expense for year ended 30 June 2017 2018 2019 2020 Equipment type 1 2 3 4 (20 marks)
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