Robert Corporation purchased a new machine for its assembly line on July $1,2000.$ The purchase price of the machine was $$100,000.$ Robert spent $$10,000$ to transport the machine to its plant, $$25,000$ to install the machine, and $$15,000$ to test run the machine. 

 

Robert believed that the machine could be used for a maximum of $10$ years. However, due to expected obsolescence, the company planned to retire the machine in $5$ years. The estimated salvage value was $$20,000.$ The company's fiscal year$-$end is December $31.$

Q$1$: prepare a depreciation schedule using the double declining balance method. 

 

Double Declining Balance Method:

DDB

At the beginning of $2002,$ Robert determined that the total estimated service life should be $9\mathrm{.}5$ years. The new estimated salvage value was $$12,000.$

Q$2$: What was the depreciation expense in $2002?$ What was the book value of this machine at the end of $2002?$

$\frac{72,00}{9\mathrm{.}5-1\mathrm{.}5}$

$\frac{1}{8}\frac{3}{8}\frac{1}{4}$

Dep Exp $of$

$18,000,BN54000$

At the beginning of $2003,$ Robert reviewed the machine for possible impairment. The undiscounted future cash flows were expected to be $$50,000.$ Since there was no active market for this machine anymore, Robert used the present value method to compute the machine's fair value. The present value of future cash flows was $$48,000.$

Q$3$: Determine whether an impairment occurred. If so$,$ how much impairment loss should Robert record?

Right after the impairment test, Robert decided to change its depreciation method to straightline method. The machine was estimated to have a remaining service life of $4$ years, and estimated salvage value was still $$12,000.$

 Q$4$: What should be the depreciation expense in $2003?$

At the end of $2003,$ Robert sold the machine for $$40,000$ cash.

Q$5$: Write out the journal entry for the sale.