Question P 11-2
a) Compute the depreciation expense for the years indicated using the following methods. (Round to the nearest dol () Straight-line method for 2017 (2) Sum-of-the-years-digits method for 2018. 13) Double-declining-balance method for 2017 (b) Suppose Kate Crow, the president of Alladin, tells you that because the company is a new organization, she expe will be several years before production and sales reach optimum levels. She asks you to recommend a deprecia method that will allocate less of the company's depreciation expense to the early years and more to later years ol P11-2 (L01,2) Depreciation for Partial Periods-sl Act, SYD, and Declining-Balance) The cost of equipment purchs mated at 525,000 units. During 2017, the machine was operated 6,000 hours and produced 55,000 units. During 2018, the mach assets' lives. What method would you recommend? by Charleston, Inc, on June 1, 2017, is $89,000. It is estimated that the machine will have a $5,000 salvage value at the end o 42,000, and its total production is service life. Its service life is estimated at 7 years, its total working hours are estimated at was operated 5,500 hours and produced 48,000 units e eypense on the machine for the year ending December 31, 2017, and the year ending December 31,20 using the following methods (d) Sum-of-the-years'-digits. (e) Declining-balance (twice the straight-line rate). b) Units-of-output. c) Working hours. P11-3 (L01,2) (Depreciation-SYD, Act, SL, and DDB) The following data relate to the Machinery account of Eshkol, Inc December 31, 2017 Original cost Year purchased Useful life Salvage value Depreciation 51,000 2013 2016 10 years s 5,000 Double-declining balance 2012 2014 10 ywars 15,000 hours15 years 5 3,000 $ 3,100 Sum-of-the- $ 5,000 method years-digits Activity Straight-line Accum, depr. through 2017 $31,200 "In the year an asset is purchased, Eshkol, Inc does not recoed any depreciaticn expense on the asset In the year an asset is ntired or traded in, Eshkol, Inc. takes a fuill year's depreciation on the asset 535.200 $15,000 $16,000 The following transactions occurred during 2018. (a) On May 5, Machine A was sold for $13,000 cash. The company's bookkeeper recorded this retirement in the followin manner in the cash receipts journal. Cash 13,000 Machinery (Machine A) 13,000 (b) On December 31, it was determined that Machine B had been used 2,100 hours during 2018. (c) On December 31, before computing depreciation expense on Machine C, the mana useful life remaining from January 1, 2018, was 10 years. gement of Eshkol, Inc. decided th 31, it was discovered that a machine purchased in 2017 had been expensed completely in that year. Thi cost $28,000 and has a useful life of 10 years and no salvage value. Management has decided to use the double declining-balance method for this machine, which can be referred to as "Machine E. Instructions Prepare the necessary correcting entries for the year 2018. Record t machines. No entry is necessary for Machine D P11-4 (L01,2) (Depreciation and Error Analysis) A depreciation schedule for pany was requested by your auditor soon after December 31, 2018, showing the ad the appropriate depreciation ex pense on the above-mentione tritrucks of Ichirg M
